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The value of bad ratings: An experiment on the impact of distortions in reputation systems

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  • Keser, Claudia
  • Späth, Maximilian

Abstract

We study the robustness of reputation management systems against distortions in rating behavior. In a laboratory trust experiment with reputation management, we mimic a positive bias by exclusively offering the option to rate positively or to give no rating. As predicted by theoretical considerations, this bias leads to significantly less trust than a system that additionally offers a negative rating option. A system relying solely on negative ratings does not have such an adverse effect. This highlights the importance of negative ratings for the effectiveness of reputation systems.

Suggested Citation

  • Keser, Claudia & Späth, Maximilian, 2020. "The value of bad ratings: An experiment on the impact of distortions in reputation systems," University of Göttingen Working Papers in Economics 389, University of Goettingen, Department of Economics.
    • Handle: RePEc:zbw:cegedp:389
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    More about this item

    Keywords

    Trust; Trustworthiness; Reputation System; Experiment;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games

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