How Valuable Is a Good Reputation?: A Sample Selection Model of Internet Auctions

Autores: Jeffrey A. Livingston
Localización: The Review of economics and statistics, ISSN 0034-6535, Vol. 87, Nº 3, 2005, págs. 453-465
Idioma: inglés
DOI: 10.1162/0034653054638391
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Resumen
- On the online auction site eBay, by convention, sellers do not ship goods to winning bidders until after they have received payment, so there is an opportunity for sellers to take advantage of bidders' trust. Realizing this, the designers of eBay created a system that relies on self-enforcement using reputation. Several recent studies have found that bidders give little or no reward to sellers who have better reputations. I show that in fact, sellers are strongly rewarded for the first few reports that they have behaved honestly, but marginal returns to additional reports are severely decreasing.