EconPapers    
Economics at your fingertips  
 

Bridging the Trust Gap in Electronic Markets

Gary E. Bolton (), Elena Katok () and Axel Ockenfels

Papers on Strategic Interaction from Max Planck Institute of Economics, Strategic Interaction Group

Abstract: Trust that suppliers and buyers will keep their word is a necessary ingredient to a well functioning marketplace. Nowhere is the issue trickier than for electronic markets, where transactions tend to be geographically diffuse and anonymous, putting them out of the reach of the legal safeguards and the long-term relationships that build trust in the brick-and-mortar world. Many online platforms have turned to automated reputation systems as a way of giving traders a heads-up on who they are dealing with. Here we describe a strategic framework for thinking about these systems. We also describe some lab data that provides an initial sense of effectiveness. We find that reputation has substantial positive effect, but not enough to be a close substitute for personal relationships; this is so even though our laboratory test abstracts away from many of the problems reputation systems must confront in the field. The evidence suggests directions for improving automated reputation system performance.

New Economics Papers: this item is included in nep-exp
Date: 2002-07
References: View references in EconPapers View complete reference list from CitEc
Citations View citations in EconPapers (4) Track citations by RSS feed

Downloads: (external link)
ftp://papers.econ.mpg.de/esi/discussionpapers/2002-26.pdf (application/pdf)

Related works:
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:esi:discus:2002-26

Ordering information: This working paper can be ordered from
http://www.econ.mpg. ... arch/ESI/discuss.php

Access Statistics for this paper

More papers in Papers on Strategic Interaction from Max Planck Institute of Economics, Strategic Interaction Group
Contact information at EDIRC.
Series data maintained by Karin Richter (). This e-mail address is bad, please contact .

 
Page updated 2014-11-05
Handle: RePEc:esi:discus:2002-26