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Fixing feedback revision rules in online markets

Author

Listed:
  • Bolton, Gary

  • Breuer, Kevin

  • Greiner, Ben

  • Ockenfels, Axel

Abstract

Feedback withdrawal mechanisms in online markets aim to facilitate the resolution of conflicts during transactions. Yet, frequently used online feedback withdrawal rules are flawed and may backfire by inviting strategic transaction and feedback behavior. Our laboratory experiment shows how a small change in the design of feedback withdrawal rules, allowing unilateral rather than mutual withdrawal, can both reduce incentives for strategic gaming and improve coordination of expectations. This leads to less trading risk, more cooperation, and higher market efficiency.

Suggested Citation

  • Bolton, Gary & Breuer, Kevin & Greiner, Ben & Ockenfels, Axel, 2020. "Fixing feedback revision rules in online markets," Department for Strategy and Innovation Working Paper Series 01/2020, WU Vienna University of Economics and Business.
    • Handle: RePEc:wiw:wus055:7387
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    2. Rense Corten & Judith Kas & Timm Teubner & Martijn Arets, 2023. "The role of contextual and contentual signals for online trust: Evidence from a crowd work experiment," Electronic Markets, Springer;IIM University of St. Gallen, vol. 33(1), pages 1-17, December.

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    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • C9 - Mathematical and Quantitative Methods - - Design of Experiments
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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