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The Actual Structure of eBay’s Feedback Mechanism and Early Evidence on the Effects of Recent Changes

Author

Listed:
  • Klein, Tobias J.
  • Lambertz, Christian
  • Spagnolo, Giancarlo
  • Stahl, Konrad O.

Abstract

eBay’s feedback mechanism is considered crucial to establishing and maintaining trust on the world’s largest trading platform. The effects of a user’s reputation on the probability of sale and on prices are at the center of a large number of studies. More recent theoretical work considers aspects of the mechanism itself. Yet, there is confusion amongst users about its exact institutional details, which also changed substantially in the last few months. An understanding of these details, and how the mechanism is perceived by users, is crucial for any assessment of the system. We provide a thorough description of the institutional setup of eBay’s feedback mechanism, including recent changes to it. Most importantly, buyers now have the possibility to leave additional, anonymous ratings on sellers on four different criteria. We discuss the implications of these changes and provide first descriptive evidence on their impact on rating behavior.

Suggested Citation

  • Klein, Tobias J. & Lambertz, Christian & Spagnolo, Giancarlo & Stahl, Konrad O., 2007. "The Actual Structure of eBay’s Feedback Mechanism and Early Evidence on the Effects of Recent Changes," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 220, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
  • Handle: RePEc:trf:wpaper:220
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    File URL: https://epub.ub.uni-muenchen.de/13332/1/220.pdf
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    Cited by:

    1. Tobias J. Klein & Christian Lambertz & Konrad O. Stahl, 2016. "Market Transparency, Adverse Selection, and Moral Hazard," Journal of Political Economy, University of Chicago Press, vol. 124(6), pages 1677-1713.
    2. 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.
    3. 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.
    4. Wibral, Matthias, 2014. "Identity Changes and the Efficiency of Reputation Systems," IZA Discussion Papers 8216, Institute of Labor Economics (IZA).

    More about this item

    Keywords

    eBay; reputation mechanism; strategic feedback behavior; informational content; reciprocity; fear of retaliation;

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software

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