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Buyer feedback as a filtering mechanism for reputable sellers

Paolo Laureti, Frantisek Slanina, Yi-Kuo Yu and Yi-Cheng Zhang

Game Theory and Information from EconWPA

Abstract: We propose a continuum model for the description of buyer and seller dynamics in an Internet market. The relevant variables are the research effort of buyers and the sellers' reputation building process. We show that, if a commercial website gives consumers the possibility to rate credibly sellers they bargained with, vendors are forced to be more honest. This leads to mutual beneficial symbiosis between buyers and sellers; the overall enhanced volume of transactions contributes ultimately to the website, which facilitates the matchmaking service.

Keywords: Asymmetric information; Internet commerce; Reputation mechanism (search for similar items in EconPapers)
JEL-codes: C73 C39 C49 D82 D52 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-net
Date: 2003-07-16
Note: Type of Document - Postscript; prepared on linux; to print on PostScript; pages: 19; figures: included. Published on Physica A 316 (2002) 413
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