The value of reputation on eBay: A controlled experiment
- 4.3k Downloads
We conducted the first randomized controlled field experiment of an Internet reputation mechanism. A high-reputation, established eBay dealer sold matched pairs of lots—batches of vintage postcards—under his regular identity and under new seller identities (also operated by him). As predicted, the established identity fared better. The difference in buyers’ willingness-to-pay was 8.1% of the selling price. A subsidiary experiment followed the same format, but compared sales by relatively new sellers with and without negative feedback. Surprisingly, one or two negative feedbacks for our new sellers did not affect buyers’ willingness-to-pay.
KeywordsField experiment eBay Reputation
Unable to display preview. Download preview PDF.
- Ba, S., & Pavlou, P. A. (2002). Evidence of the Effect of Trust Building Technology in Electronic Markets: Price Premiums and Buyer Behavior. MIS Quarterly, 26, 243–268.Google Scholar
- Bajari, P., & Hortacsu, A. (2003). Winner’s curse, reserve prices and endogenous entry: Empirical insights from eBay auctions. RAND Journal of Economics, 34(2).Google Scholar
- Bolton, G., Fong, D., & Mosquin, P. (2003). Bayes factors with an application to experimental economics. Experimental Economics, 6(3).Google Scholar
- Bolton, G., Katok, E., & Ockenfels, A. (2003). How effective are electronic reputation mechanisms? An experimental investigation. Available on-line at http://ockenfels.uni-koeln.de/download/papers/BKO2.pdf.
- Cabral, L., & Hortacsu, A. (2004). The dynamics of seller reputation: Theory and evidence from eBay, NBER. Available on-line at http://www.nber.org/papers/w10363.
- Dewally, M., & Ederington, L. H. (2006). Reputation, certification, warranties, and information as remedies for seller-buyer information asymmetries: Lessons from the online comic book market. The Journal of Business, 79(2).Google Scholar
- Eaton, D. H. (2002). Valuing information: Evidence from guitar auctions on eBay. Murray, KY, Murray State University: 28. Available on-line at http://campus.murraystate.edu/academic/faculty/david.eaton/workpaper0201.pdf.
- Harrison, G. W., & List, J. A. (2004). Field experiments. Journal of Economic Literature, 42(4).Google Scholar
- Henrich, B., Bowles, Camerer, Fehr, Gintis, & McElreath (2001). Cooperation, reciprocity and punishment in fifteen small-scale societies. American Economic Review, May 2001, 7.Google Scholar
- Hossain, T., & Morgan, J. Plus shipping and handling: Revenue (Non) equivalence in field experiments on eBay. Advances in Economic Analysis and Policy, forthcoming.Google Scholar
- Houser, D., & Wooders, J. (forthcoming). Reputation in auctions: Theory, and evidence from eBay. Journal of Economics and Management Strategy.Google Scholar
- Jin, G., & Kato, A. (2004). Consumer frauds and the misinformed: Evidence from an online field experiment, University of Maryland. Available on-line at http://www.glue.umd.edu/~ginger/research/ebay-Jin-Kato-Feb04.pdf.
- Kalyanam, K. & McIntyre, S. (2001). Return on reputation in online auction markets. Santa Clara, CA, Santa Clara University. Available on-line at http://business.scu.edu/faculty/research/working_papers/pdf/kalyanam_mcintyre_wp10.pdf.
- Katkar, R., & Lucking-Reiley, D. (2000). Public versus secret reserve prices in eBay auctions: Results from a Pokémon field experiment. Available on-line at http://eller.arizona.edu/~reiley/papers/SecretReserves. pdf.
- Livingston, J. (2002). How valuable is a good reputation? A sample selection model of internet auctions, University of Maryland. Available on-line at http://www.wam.umd.edu/~kth/reputation1.pdf.
- Lucking-Reiley, D. (1999). Using field experiments to test equivalence between auction formats: Magic on the internet. The American Economic Review, 1063–1080.Google Scholar
- Lucking-Reiley, D., Bryan, D., Prasad, N., & Reeves, D. (2000). Pennies from eBay: the determinants of price in online auctions, vanderbilt. Available on-line at http://www.vanderbilt.edu/econ/reiley/papers/PenniesFromEBay.pdf.
- Melnik, M. I., & Alm, J. (2002). Does a seller’s reputation matter? Evidence from eBay auctions. Journal of Industrial Economics, 50(September), 337–350.Google Scholar
- Melnik, M. I., & Alm, J. (2003). Reputation, information signals, and willingness to pay for heterogeneous goods in online auctions. Available on-line at http://www.gsu.edu/~wwwsps/publications/2003/030101onlineauctions.htm.
- Reiley, D. (forthcoming). Field experiments on the effects of reserve prices in auctions: More magic on the internet. RAND Journal of Economics.Google Scholar
- Resnick, P., & Zeckhauser, R. (2002). Trust among strangers in internet transactions: Empirical analysis of eBay’s reputation system. In M. R. Baye (ed.), The Economics of the Internet and E-Commerce. (pp. 127–157), Amsterdam, Elsevier Science. 11.Google Scholar
- Results from a Pokeon Field Experiment. Available on-line at http://eller.arizona.edu/reiley/papers/SecretReserves.pdf
- Schemo, D. J. (2004). In online auctions, misspelling in ads often spells cash. New York Times.Google Scholar
- Slonim, R., & Roth, A. (1998). Learning in high stakes ultimatum games: An experiment in the slovak republic. Econometrica, 66(3), 569–596.Google Scholar
- Tversky, A., & Kahneman, D. (1974). Under uncertainty: Heuristics and biases. Science, 185, 1124–1131.Google Scholar
- Yin, P.-L. (2002). Information dispersion and auction prices, stanford university. Available on-line at http://www.stanford.edu/~pyin/info.pdf.