An Experimental Study of Reputation with Heterogeneous Goods
Decision Support Systems, Volume 54, Issue 2, January, 2013, pp. 1134-1149
32 Pages Posted: 24 Oct 2013
Date Written: October 24, 2012
Abstract
Reputation systems provide decision support for e-commerce. A shortcoming of existing systems is that all transactions are rated equally, and the impact of reputation systems for differently valued goods is not well understood. In an experiment, we study a heterogeneous good market. We find that the reputation system increases surplus by increasing transactions in the high value good. Allowing for heterogeneous goods reduces information, as buyers cannot determine whether the seller previously transacted in low/high value goods. We test a new system, which displays reputation separately for each good. We provide evidence that this additional information is utilized in decisions.
Keywords: laboratory experiment, trust, reputation, e-commerce, decision, market
JEL Classification: D02, D83
Suggested Citation: Suggested Citation