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Good bargains and reputable sellers - An experimental investigation of electronic feedback systems

Listed author(s):
  • Domenico Colucci


    (Dipartimento di Matematica per le Decisioni - Università degli Studi di Firenze)

  • Simone Salotti


    (Department of Economics - National University of Ireland, Galway)

  • Vincenzo Valori


    (Dipartimento di Matematica per le Decisioni - Università degli Studi di Firenze)

Electronic reputation mechanisms aim at signaling the quality of traders and at hampering misbehavior. When a buyer rates a seller, the main aspect to keep into account should be the consistency between the good’s advertised characteristics and the actual good itself. On the other hand, the buyer’s satisfaction may also be related to the surplus stemming from the transaction, i.e. whether or not the purchase was a good bargain. This constitutes a possible source of distortion in the way sellers are rated. Using an experimental investigation, we find that the transaction payoff is in fact a significant factor driving the feedback. Conversely, the match (or mismatch) between the ex-ante advertised description and the item received is comparatively less important, and may be offset by the effect of the payoff. This result accounts for the occurrence on some e-marketplace contexts of sellers getting away with inflated descriptions of the goods on sale without compromising their reputation.

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Paper provided by Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa in its series Working Papers - Mathematical Economics with number 2011-04.

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Length: 28 pages
Date of creation: Mar 2011
Handle: RePEc:flo:wpaper:2011-04
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