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Cited by 1,118Auction Theory and ApplicationsExperimental Behavioral Economics StudiesNames, Identity, and Discrimination Research

The value of reputation on eBay: A controlled experiment

Open access
Resnick, Paul, Zeckhauser, Richard, Swanson, John, Lockwood, Kate·2006·Experimental Economics
DOI 10.1007/s10683-006-4309-2
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Abstract

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.

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  • New complementors find it difficult to collect good ratings and often compete with more established complementors who have already built a track record.

    “Further, prior research suggests that it is difficult for new complementors who have just joined a new platform to collect good ratings. These new complementors often find themselves competing with more established complementors who have already built a track record (Gutt and Herrmann 2015; Resnick et al. 2006).”

    From In Stars We Trust – A Note on Reputation Portability Between Digital Platforms (2022) · cites this paper as Resnick et al. 2006

    The Abstract and Discussion compare newcomer eBay seller IDs with an established ID and report that the established ID earned higher prices. But the paper does not establish that newcomers have difficulty collecting good ratings: the Procedures section says the new IDs accumulated positive feedback during the experiment. It studies eBay sellers, not complementors on new platforms generally. (LLM, conf=0.86)

    Experimental — accuracy not yet measured

  • Resnick et al. (2006) estimate an 8% price premium to having 2,000 positive and 1 negative feedback over a reputation of 10 positive and no negative feedbacks.

    “They estimate an 8% price premium to having 2,000 positive and 1 negative feedback over a reputation of 10 positive and no negative feedbacks.”

    From Reputation and Feedback Systems in Online Platform Markets (2016) · cites this paper as Resnick et al. (2006)

    The Discussion reports a 7.6% price difference between an established seller with more than 2,000 positive comments and one negative comment and new seller IDs. But the Procedures say the new IDs began with zero feedback and accumulated positives during the experiment; they did not all have a fixed reputation of 10 positives. The roughly 8% premium is supported, but the stated comparator is too specific. (LLM, conf=0.88)

    Experimental — accuracy not yet measured

  • Economists are puzzled that evaluative infrastructures sustain markets despite factual inaccuracies, misleading claims, and unrepresentative assessments.

    “This is highlighted by the puzzlement of economists that find evaluative infrastructures to be capable of sustaining markets despite being plagued by factual inaccuracies, misleading claims, and unrepresentative assessments (Tadelis, 2016;Resnick, et al., 2006).”

    From Evaluative infrastructures: Accounting for platform organization (2017) · cites this paper as Resnick, et al., 2006

    The Conclusion (page unavailable) calls eBay feedback a system that works despite apparent weaknesses: only half of buyers leave feedback, raising concern about selection bias, yet large numbers of items sell. This supports the puzzlement about markets functioning with potentially unrepresentative assessments. The paper does not establish that the feedback system is plagued by factual inaccuracies or misleading claims; its Additional information section instead suggests that serious seller misrepresentation is uncommon. (LLM, conf=0.87)

    Experimental — accuracy not yet measured

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Authors
Resnick, P., Zeckhauser, R., Swanson, J., & Lockwood, K.
Affiliations
  • University of Michigan (US)
  • Harvard University (US)
  • Northwestern University (US)
ORCID
Venue
Experimental Economics
Publisher
Cambridge University Press (CUP)
Published
2006-06
Volume
9
Issue
2
Pages
79-101
ISSN
  • 1386-4157 (ISSN-L)
  • 1573-6938
DOI
10.1007/s10683-006-4309-2
OpenAlex
W3121755630
Cited by
1,118
References
36
Citations by year
2026: 25 · 2025: 17 · 2024: 21 · 2023: 23 · 2022: 30 · 2021: 38 · 2020: 40 · 2019: 66 · 2018: 41 · 2017: 55 · 2016: 44 · 2015: 60 · 2014: 62 · 2013: 60 · 2012: 91
FWCI
109.70
Type
journal article
Language
en
Open access
Licence
www.cambridge.org/core/terms (unspecified, 6861 d)
Locations
  • Experimental Economics (publishedVersion)
  • SSRN Electronic Journal (acceptedVersion)
  • RePEc: Research Papers in Economics (submittedVersion)
Funders
  • National Science Foundation
  • Carnegie Mellon University
Topics
  • Social Sciences › Decision Sciences › Management Science and Operations Research › Auction Theory and Applications
  • Social Sciences › Safety Research › Experimental Behavioral Economics Studies
  • Social Sciences › Sociology and Political Science › Names, Identity, and Discrimination Research
Keywords
online reputation, eBay, online auctions, willingness to pay, negative feedback, buyer behavior, online marketplaces

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