Strategic Behavior in Online Reputation Systems: Evidence from Revoking on eBay

Shun Ye, Guodong Gao, and Siva Viswanathan. 2014. "Strategic Behavior in Online Reputation Systems: Evidence from Revoking on eBay," MIS Quarterly, (38: 4) pp.1033-1056.

51 Pages Posted: 22 Dec 2011 Last revised: 4 Dec 2017

See all articles by Shun Ye

Shun Ye

George Mason University - Department of Information Systems and Operations Management

Guodong (Gordon) Gao

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

Siva Viswanathan

University of Maryland - Robert H. Smith School of Business

Date Written: June 9, 2013

Abstract

This study examines how sellers respond to changes in the design of reputation systems on eBay. Specifically, we focus on one particular strategic behavior on eBay’s reputation system – the sellers’ explicit retaliation and subsequent revoking of negative feedback provided by buyers. We examine how these strategic sellers respond to the removal of their ability to retaliate against buyers and to revoke negative feedback. We utilize the biggest policy change of eBay’s reputation system in its history, which provides a natural experimental setting that allows us to infer the causal impact of the reputation system on seller behavior. Our results show that revoking enables low quality sellers to manipulate their reputations and masquerade as high-quality sellers. We find that these sellers react strongly to eBay’s announcement of a proposed ban on revoking. Interestingly, after the power of these revokers is curtailed, we find evidence that they exert more effort to improve their reputation scores. This study provides valuable insights about the relationship between reputation system and seller behavior, which have important implications for the design of online reputation mechanisms.

Keywords: Reputation mechanisms, online ratings, quality transparency, online auctions

Suggested Citation

Ye, Shun and Gao, Guodong (Gordon) and Viswanathan, Siva, Strategic Behavior in Online Reputation Systems: Evidence from Revoking on eBay (June 9, 2013). Shun Ye, Guodong Gao, and Siva Viswanathan. 2014. "Strategic Behavior in Online Reputation Systems: Evidence from Revoking on eBay," MIS Quarterly, (38: 4) pp.1033-1056.. Available at SSRN: https://ssrn.com/abstract=1975124 or http://dx.doi.org/10.2139/ssrn.1975124

Shun Ye (Contact Author)

George Mason University - Department of Information Systems and Operations Management ( email )

4400 University Drive
Fairfax, VA 22030
United States

Guodong (Gordon) Gao

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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