Trust among Internet Traders: A Behavioral Economics Approach
Gary Bolton (),
Elena Katok () and
No 5, Working Paper Series in Economics from University of Cologne, Department of Economics
Standard economic theory does not capture trust among anonymous Internet traders. But when traders are allowed to have social preferences, uncertainty about a seller's morals opens the door for trust, reward, exploitation and reputation building. We report experiments suggesting that sellers' intrinsic motivations to be trustworthy are not sufficient to sustain trade when not complemented by a feedback system. We demonstrate that it is the interaction of social preferences and cleverly designed reputation mechanisms that solves to a large extent the trust problem on Internet market platforms. However, economic theory and social preference models tend to underestimate the difficulties of promoting trust in anonymous online trading communities.
Pages: 25 pages
New Economics Papers: this item is included in nep-cbe and nep-net
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5) Track citations by RSS feed
Published in Analyse und Kritik, 2004, 26, 185-202
Downloads: (external link)
https://ockenfels.uni-koeln.de/fileadmin/wiso_fak/ ... _download/wp0005.pdf (application/pdf)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:kls:series:0005
Access Statistics for this paper
More papers in Working Paper Series in Economics from University of Cologne, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Kiryl Khalmetski ().