Is the Ebay Feedback System Really Efficient? An Experimental Study

32 Pages Posted: 28 Jan 2008

See all articles by David Masclet

David Masclet

Université de Rennes I; M@rsouin

Thierry Pénard

Université de Rennes 1 - Faculte de Sciences Economiques; Armorican Mole for Research on the Information Society and Uses of the Internet; Centre de Recherche en Économie et Management (CREM)

Date Written: January 2008

Abstract

The eBay Feedback Forum is claimed to be a crucial component of the success of eBay. Many empirical studies have found that this feedback system exerts a deterrent effect on the opportunistic behavior the Internet's anonymity may incite buyers and sellers to adopt. The feedback system in place on eBay is however far from being perfect and may be especially vulnerable to strategic ratings (or non-ratings) that might reduce the informational content of feedback profiles. This article aims to examine the efficiency of the eBay feedback system, through a set of experiments based on the trust game. Our experimental design consists of four different treatments. The baseline treatment corresponds to a finite repeated simultaneous trust game. The second treatment, called "eBay rating" is identical to the baseline treatment except that we added a second stage in which the players have the opportunity of rating their partner. In this treatment, each participant is given the choice to either evaluate immediately or wait, knowing that only one rating will be accepted. The third treatment, called "Sequential rating" is identical to the "eBay rating" treatment, except that the order in which players evaluate one another is randomly determined by the computer. Finally in the fourth treatment, called "Simultaneous rating", both players are required to make their rating decisions simultaneously. Our experimental results indicate that the eBay feedback system could be improved by either constraining partners to leave ratings simultaneously or by predetermining the rating sequence.

Keywords: Trust game, eBay, Reputation

JEL Classification: C92, C72, L14, L86

Suggested Citation

Masclet, David and Pénard, Thierry, Is the Ebay Feedback System Really Efficient? An Experimental Study (January 2008). Available at SSRN: https://ssrn.com/abstract=1086377 or http://dx.doi.org/10.2139/ssrn.1086377

David Masclet (Contact Author)

Université de Rennes I ( email )

11 Rue Jean Macé
35065 Rennes Cedex, Rennes
France

M@rsouin ( email )

France

Thierry Pénard

Université de Rennes 1 - Faculte de Sciences Economiques ( email )

7, Place Hoche
35000 Rennes
France

Armorican Mole for Research on the Information Society and Uses of the Internet ( email )

France

Centre de Recherche en Économie et Management (CREM) ( email )

7 place Hoche
Rennes, Bretagne 35065
France

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