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Do reputation feedback systems really improve trust among anonymous traders? An experimental study

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  • David Masclet
  • Thierry Pénard

Abstract

Feedback systems are claimed to be a crucial component of the success of electronic marketplaces like eBay or Amazon Marketplace. This article aims to compare the effects of various feedback systems on trust between anonymous traders, through a set of experiments based on the trust game. Our results indicate that trust is significantly improved by the introduction of a reputation feedback system. However, such mechanisms are far from being perfect and are vulnerable to strategic ratings and reciprocation. Our findings indicate that some changes in rating rules may significantly improve the efficiency of feedback systems, by avoiding strategic rating or reciprocation, and hence stimulate trust and trustworthiness among traders. In particular, a system in which individuals are not informed of their partner's rating decision before making their own decision provides better results, both in terms of trust and earnings.

Suggested Citation

  • David Masclet & Thierry Pénard, 2012. "Do reputation feedback systems really improve trust among anonymous traders? An experimental study," Applied Economics, Taylor & Francis Journals, vol. 44(35), pages 4553-4573, December.
  • Handle: RePEc:taf:applec:44:y:2012:i:35:p:4553-4573
    DOI: 10.1080/00036846.2011.591740
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    References listed on IDEAS

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    1. Urs Fischbacher & Simon G�chter, 2005. "Heterogeneous social preferences and the dynamics of free riding in public goods," IEW - Working Papers 261, Institute for Empirical Research in Economics - University of Zurich.
    2. Li, Lingfang (Ivy) & Xiao, Erte, 2010. "Money Talks? An Experimental Study of Rebate in Reputation System Design," MPRA Paper 22401, University Library of Munich, Germany.
    3. Benedikt Herrmann & Christian Thöni, 2009. "Measuring conditional cooperation: a replication study in Russia," Experimental Economics, Springer;Economic Science Association, vol. 12(1), pages 87-92, March.
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    Cited by:

    1. Dmitry Ryvkin & Danila Serra & James Tremewan, 2015. "I paid a bribe: Information Sharing and Extortionary Corruption," Working Papers wp2015_07_01, Department of Economics, Florida State University.
    2. Matthias Wibral, 2015. "Identity changes and the efficiency of reputation systems," Experimental Economics, Springer;Economic Science Association, vol. 18(3), pages 408-431, September.
    3. Wibral, Matthias, 2014. "Identity changes and the efficiency of reputation systems," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 465, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
    4. Wibral, Matthias, 2014. "Identity Changes and the Efficiency of Reputation Systems," IZA Discussion Papers 8216, Institute for the Study of Labor (IZA).
    5. Lumeau, Marianne & Masclet, David & Penard, Thierry, 2015. "Reputation and social (dis)approval in feedback mechanisms: An experimental study," Journal of Economic Behavior & Organization, Elsevier, vol. 112(C), pages 127-140.
    6. Johnson, Noel D. & Mislin, Alexandra A., 2011. "Trust games: A meta-analysis," Journal of Economic Psychology, Elsevier, vol. 32(5), pages 865-889.
    7. Greiff, Matthias & Paetzel, Fabian, 2016. "Second-order beliefs in reputation systems with endogenous evaluations – an experimental study," Games and Economic Behavior, Elsevier, vol. 97(C), pages 32-43.
    8. repec:eee:eecrev:v:94:y:2017:i:c:p:1-22 is not listed on IDEAS

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