Designing Online Marketplaces: Trust and Reputation Mechanisms

30 Pages Posted: 2 Sep 2016

See all articles by Michael Luca

Michael Luca

Harvard University - Business School (HBS)

Multiple version iconThere are 2 versions of this paper

Date Written: September 1, 2016

Abstract

Online marketplaces have proliferated over the past decade, creating new markets where none existed. By reducing transaction costs, online marketplaces facilitate transactions that otherwise would not have occurred and enable easier entry of small sellers. One central challenge faced by designers of online marketplaces is how to build enough trust to facilitate transactions between strangers. This paper provides an economist’s toolkit for designing online marketplaces, focusing on trust and reputation mechanisms.

Suggested Citation

Luca, Michael, Designing Online Marketplaces: Trust and Reputation Mechanisms (September 1, 2016). Forthcoming in NBER IPE, Harvard Business School NOM Unit Working Paper No. 17-017, Available at SSRN: https://ssrn.com/abstract=2833453

Michael Luca (Contact Author)

Harvard University - Business School (HBS) ( email )

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