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Buyer feedback as a filtering mechanism for reputable sellers

Author

Listed:
  • Paolo Laureti
  • Frantisek Slanina
  • Yi-Kuo Yu
  • Yi-Cheng Zhang

Abstract

We propose a continuum model for the description of buyer and seller dynamics in an Internet market. The relevant variables are the research effort of buyers and the sellers' reputation building process. We show that, if a commercial website gives consumers the possibility to rate credibly sellers they bargained with, vendors are forced to be more honest. This leads to mutual beneficial symbiosis between buyers and sellers; the overall enhanced volume of transactions contributes ultimately to the website, which facilitates the matchmaking service.

Suggested Citation

  • Paolo Laureti & Frantisek Slanina & Yi-Kuo Yu & Yi-Cheng Zhang, 2003. "Buyer feedback as a filtering mechanism for reputable sellers," Game Theory and Information 0307001, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpga:0307001
    Note: Type of Document - Postscript; prepared on linux; to print on PostScript; pages: 19; figures: included. Published on Physica A 316 (2002) 413
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    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/game/papers/0307/0307001.pdf
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    Cited by:

    1. Enrico Maria Fenoaltea & Izat B. Baybusinov & Jianyang Zhao & Lei Zhou & Yi-Cheng Zhang, 2021. "The Stable Marriage Problem: an Interdisciplinary Review from the Physicist's Perspective," Papers 2103.11458, arXiv.org.
    2. Gabuthy, Yannick & Jacquemet, Nicolas & Marchand, Nadège, 2008. "Does resorting to online dispute resolution promote agreements? Experimental evidence," European Economic Review, Elsevier, vol. 52(2), pages 259-282, February.
    3. Laureti, Paolo & Moret, Lionel & Zhang, Yi-Cheng, 2005. "Aggregating partial, local evaluations to achieve global ranking," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 345(3), pages 705-712.

    More about this item

    Keywords

    Asymmetric information; Internet commerce; Reputation mechanism;
    All these keywords.

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • C39 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Other
    • C49 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Other
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D52 - Microeconomics - - General Equilibrium and Disequilibrium - - - Incomplete Markets

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