Can Online Trading Survive Bad Mouthing? An Experimental Investigation

Decision Support Systems (Forthcoming)

26 Pages Posted: 14 Mar 2012 Last revised: 21 Aug 2014

See all articles by Ninghua Du

Ninghua Du

Shanghai University of Finance and Economics

Hailiang Huang

Shanghai University of Finance and Economics

Lingfang (Ivy) Li

Shanghai University of Finance and Economics

Date Written: March 1, 2012

Abstract

We use controlled lab experiments to test whether the market efficiency being affected by unfair negative ratings, and whether announcing the percentage of unfair ratings in the market makes any difference. We find that the market efficiency is higher than no rating information case even when unfair ratings and ambiguous ratings are present. We also find that buyers behave differently when the unfair rating information is known and when the information is unknown; however, comparing with the market with fair ratings, there is no statistically significant difference in the market efficiency whenever the percentage of unfair ratings is known or unknown.

Keywords: trust and trustworthiness, unfair rating, reputation systems, ambiguity, experiment

JEL Classification: C92, D03, L81

Suggested Citation

Du, Ninghua and Huang, Hailiang and Li, Lingfang (Ivy), Can Online Trading Survive Bad Mouthing? An Experimental Investigation (March 1, 2012). Decision Support Systems (Forthcoming). Available at SSRN: https://ssrn.com/abstract=2020090 or http://dx.doi.org/10.2139/ssrn.2020090

Ninghua Du

Shanghai University of Finance and Economics ( email )

777 Guoding Road
Shanghai, Shanghai 200433
China

Hailiang Huang (Contact Author)

Shanghai University of Finance and Economics ( email )

777 Guoding Road
Shanghai, Shanghai 200433
China

Lingfang (Ivy) Li

Shanghai University of Finance and Economics ( email )

777 Guoding Road
Shanghai, Shanghai 200433
China

HOME PAGE: http://www.ivy-li.net

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