Trust among Internet Traders: A Behavioral Economics Approach
Standard economic theory does not capture trust among anonymous Internet traders. But when traders are allowed to have social preferences, uncertainty about a seller's morals opens the door for trust, reward, exploitation and reputation building. We report experiments suggesting that sellers' intrinsic motivations to be trustworthy are not sufficient to sustain trade when not complemented by a feedback system. We demonstrate that it is the interaction of social preferences and cleverly designed reputation mechanisms that solves to a large extent the trust problem on Internet market platforms. However, economic theory and social preference models tend to underestimate the difficulties of promoting trust in anonymous online trading communities.
|Date of creation:||25 Feb 2004|
|Date of revision:|
|Publication status:||Published in Analyse und Kritik, 2004, 26, 185-202|
|Contact details of provider:|| Postal: Albertus Magnus Platz, 50923 Köln|
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