The Effect of ID Verification in Online Markets: Evidence from a Field Experiment
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eBay’s ID Verify program, which allowed sellers to pay a fee to have their identity confirmed by a credit information company, was designed to alleviate asymmetric information problems in online auctions. We conduct a field experiment where items are sold on eBay by one of four identities that either are or are not ID verified and have either a good or no reputation. We find that ID verification increases the number of bids placed but has no impact on the level of the winning bid, and may even lower the winning bid among sellers who have good reputations.
KeywordseBay Online auctions Reputation ID verification Field experiments
JEL ClassificationL14 L15 D82 D12 C9
We thank Lawrence White, Dhaval Dave, and two anonymous referees—all of whom provided many helpful comments and suggestions. Brian Johns, Bidisha Ghosh, and Yunlei Tu provided excellent research assistance. Funding was provided by the Bentley University Faculty Affairs Committee. Of course, all remaining errors are our own.