Eliminating the cyber 'lemons' problem with the e-reputation in e-commerce market: theoretical model and practice

Yong Pan

International Journal of Networking and Virtual Organisations, 2011, vol. 8, issue 3/4, 182-191

Abstract: Well reputation has a very important effect in eliminating 'lemons' problem that results from informational asymmetry. Its essence is to establish the trust between buyers and sellers. Based on the 'lemons' principle put forward by US economist George Akerlof who is one of Nobel Economics Prize Laureates in 2001, this paper set up an e-reputation model in e-commerce market, and analyse the mechanism of the e-reputation in order to offer a strategic thought for eliminating the cyber 'lemons' problem with the e-reputation. The author also puts forward some ideas and concepts such as 'separating equilibrium', 'e-reputation rent' and 'chains of e-reputation'. For providing empirical evidence, the paper discusses the cases from AUCNET (Japan) and TAOBAO (China).

Keywords: informational asymmetry; lemon problem; e-reputation chains; electronic reputation; cyber problems; e-business; electronic business; e-commerce; electronic commerce; trust; buyers; sellers; George Akerlof; separating equilibrium; e-reputation rent; AUCNET; Japan; TAOBAO; China; used-cars; network auctions; online trading; networks; virtual organisations; web based organisations; online organisations; networking; world wide web; internet. (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (1)

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