On Product Uncertainty in Online Markets: Theory and Evidence1
Abstract
Online markets pose a difficulty for evaluating products, particularly experience goods, such as used cars, that cannot be easily described online. This exacerbates product uncertainty, the buyer's difficulty in evaluating product characteristics, and predicting how a product will perform in the future. However, the IS literature has focused on seller uncertainty and ignored product uncertainty. To address this void, this study conceptualizes product uncertainty and examines its effects and antecedents in online markets for used cars (eBay Motors). Extending the information asymmetry literature from the seller to the product, we first theorize the nature and dimensions (description and performance) of product uncertainty. Second, we propose product uncertainty to be distinct from, yet shaped by, seller uncertainty. Third, we conjecture product uncertainty to negatively affect price premiums in online markets beyond seller uncertainty. Fourth, based on the information signaling literature, we describe how information signals (diagnostic product descriptions and third-party product assurances) reduce product uncertainty. The structural model is validated by a unique dataset comprised of secondary transaction data from used cars on eBay Motors matched with primary data from 331 buyers who bid on these used cars. The results distinguish between product and seller uncertainty, show that product uncertainty has a stronger effect on price premiums than seller uncertainty, and identi…
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Hypothesis 4 was supported only in part.
“Hypothesis 4 was therefore supported only in part”
From Seeing Is Believing, Experiencing Is Deciding: How Augmented Reality Attributes Drive Confidence in Choice and Willingness to Pay (2026) · cites this paper as Dimoka et al. 2012
Product uncertainty is heightened online by the absence of physical inspection.
“Product uncertainty, the difficulty of judging a product's quality or its fit with one's needs, is heightened online by the absence of physical inspection (Dimoka et al. 2012;Hong and Pavlou 2014;Wang et al. 2019)”
From Seeing Is Believing, Experiencing Is Deciding: How Augmented Reality Attributes Drive Confidence in Choice and Willingness to Pay (2026) · cites this paper as Dimoka et al. 2012
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- Authors
- Dimoka, A., Hong, Y., & Pavlou, P. A.
- Affiliations
- Temple University (US)
- Venue
- MIS Quarterly
- Publisher
- MIS Quarterly
- Published
- 2012-06-01
- Volume
- 36
- Issue
- 2
- Pages
- 395-426
- ISSN
- 0276-7783 (ISSN-L)
- 2162-9730
- OpenAlex
- W3121659628
- Cited by
- 682
- References
- 15
- Citations by year
- 2026: 62 · 2025: 61 · 2024: 68 · 2023: 63 · 2022: 69 · 2021: 64 · 2020: 33 · 2019: 62 · 2018: 51 · 2017: 28 · 2016: 37 · 2015: 41 · 2014: 19 · 2013: 19 · 2012: 3
- FWCI
- 32.30
- Type
- journal article
- Language
- en
- Open access
- closed
- Locations
- MIS Quarterly (publishedVersion)
- MIS Quarterly
- Topics
- Social Sciences › Decision Sciences › Management Science and Operations Research › Auction Theory and Applications
- Social Sciences › Business, Management and Accounting › Marketing › Consumer Market Behavior and Pricing
- Social Sciences › Business, Management and Accounting › Strategy and Management › Digital Platforms and Economics
- Keywords
- product uncertainty, digital markets, used cars, experience goods, information asymmetry, price premium, information signaling, product descriptions, online auctions
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