Trust among strangers in internet transactions: Empirical analysis of eBay' s reputation system

Abstract

One of the earliest and best known Internet reputation systems is run by eBay, which gathers comments from buyers and sellers about each other after each transaction. Examination of a large data set from 1999 reveals several interesting features. First, despite incentives to free ride, feedback was provided more than half the time. Second, well beyond reasonable expectation, it was almost always positive. Third, reputation profiles were predictive of future performance, though eBay's net feedback statistic is far from the best predictor available. Fourth, there was a high correlation between buyer and seller feedback, suggesting that the players reciprocate and retaliate.

Citation

Resnick, P. and Zeckhauser, R. (2002), "Trust among strangers in internet transactions: Empirical analysis of eBay' s reputation system", Baye, M.R. (Ed.) The Economics of the Internet and E-commerce (Advances in Applied Microeconomics, Vol. 11), Emerald Group Publishing Limited, Leeds, pp. 127-157. https://doi.org/10.1016/S0278-0984(02)11030-3