Abstract

http://ssrn.com/abstract=1664822
 
 

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The Good, the Bad, or the Ugly? An Empirical Investigation of Revoking Behavior on Ebay


Shun Ye


George Mason University

Guodong (Gordon) Gao


University of Maryland - R.H. Smith School of Business

Siva Viswanathan


University of Maryland - Robert H. Smith School of Business

August 18, 2010

Robert H. Smith School Research Paper No. RHS 06-133

Abstract:     
This study investigates a crucial aspect of the reputation mechanism design in electronic markets – the ability of buyers and sellers to revoke or mutually withdraw negative feedback and ratings. Based on an analysis of recent changes in eBay’s feedback mechanism design, we find that the two-way reputation system enables certain sellers to behave opportunistically by revoking negative feedbacks they receive. This makes the reputation system less effective in discerning the quality of sellers. We also find that changes in the reputation system have a significant influence on these sellers’ behaviors. After eBay’s ban on revoking, sellers exert more effort to improve the quality of their transactions. Our findings support the moral hazard assumption regarding seller’s strategic behavior. We discuss the implications of the above findings for reputation mechanism design and practice.

Number of Pages in PDF File: 38

Keywords: mechanism design, reputation mechanisms, revoking, online auctions, moral hazard

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Date posted: August 24, 2010 ; Last revised: November 21, 2010

Suggested Citation

Ye, Shun and Gao, Guodong (Gordon) and Viswanathan, Siva, The Good, the Bad, or the Ugly? An Empirical Investigation of Revoking Behavior on Ebay (August 18, 2010). Robert H. Smith School Research Paper No. RHS 06-133. Available at SSRN: http://ssrn.com/abstract=1664822 or http://dx.doi.org/10.2139/ssrn.1664822

Contact Information

Shun Ye
George Mason University ( email )
VA 22030
United States
Guodong (Gordon) Gao (Contact Author)
University of Maryland - R.H. Smith School of Business ( email )
4325 Van Munching Hall
College Park, MD 20742
United States
HOME PAGE: http://www.rhsmith.umd.edu/faculty/ggao/
Siva Viswanathan
University of Maryland - Robert H. Smith School of Business ( email )
College Park, MD 20742-1815
United States
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