Information and reputation mechanisms in auctions of remanufactured goods

We investigate how feedback scores and alternative reputation mechanisms can mitigate asymmetric information in auctions of second-hand electronic items. In contrast to previous studies, we exploit the information available across heterogeneous goods and avoid the problems caused by different degrees of wear and tear by studying remanufactured products. We find the presence of relevant scale effects in the value of such reputation mechanisms that become complements or substitutes depending on the value of the transactions. Feedback scores are not valuable when alternative contractual devices are in place, such as refurbishment by a manufacturer-approved vendor and the availability of return policies. However, when we partition the sample according to the value of the auctions, feedback scores become effective for cheap items, whereas return policies are important for expensive goods.