The Effect of Reputation on Selling Prices in Auctions

Christian Grund () and Oliver Guertler ()
Additional contact information
Oliver Guertler: Universitaet Bonn
Authors registered in the RePEc Author Service: Oliver Gürtler ()

Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), 2008, vol. 228, issue 4, pages 345-356

Abstract: It is often argued in economics that building a reputation for trustworthiness could help individuals or firms to mitigate or even overcome problems of contractual incompleteness. In this paper, we use data from the German eBay website to test whether a seller's bad reputation has an effect on selling prices. For auctions of popular DVDs at eBay we do indeed find evidence for this hypothesis. We show that an increase in the share of negative ratings of one percentage point decreases the selling price by about 4 per cent. The number of negative ratings, in contrast, does not affect the selling price significantly. Hence, bidders on the eBay marketplace seem to concentrate on relative rather than on absolute measures of reputation. Further, we challenge the recommendation that it is profitable for eBay sellers to let their auction end in the evening, when many potential buyers are supposed to be online. We find that prices are relatively lower in the evening. This may be due to a much higher supply of DVDs in the evening.

Keywords: Auction; eBay feedback system; reputation; trustworthiness (search for similar items in EconPapers)
JEL-codes: D44 D82 K12 L81 M10 (search for similar items in EconPapers)
Date: 2008

Downloads: (external link)
http://www.wiso-net.de/webcgi?START=A60&DOKV_DB=ZE ... 14122&DOKV_HS=0&PP=1 Main text (application/pdf)
http://search.ebscohost.com/login.aspx?direct=true ... 6307&site=ehost-live Main text (application/pdf)
Access via EBSCOhost Econlit - http://www.ebscohost.com/

Related works:
Working Paper: The Effect of Reputation on Selling Prices in Auctions (2006)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:jns:jbstat:v:228:y:2008:i:4:p:345-356

Access Statistics for this article

More articles in Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik) from Justus-Liebig University Giessen, Department of Statistics and Economics
Contact information at EDIRC.
Series data maintained by Peter Winker ().