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The value of reputation on eBay: A controlled experiment

Published online by Cambridge University Press:  14 March 2025

Paul Resnick ,
Richard Zeckhauser ,
John Swanson  and
Kate Lockwood
Paul Resnick
Affiliation:
School of Information, University of Michigan
Richard Zeckhauser
Affiliation:
Kennedy School, Harvard University and Harvard Business School
John Swanson
Affiliation:
Johnninaswanson, eBay, and Mission Viejo, California
Kate Lockwood
Affiliation:
Northwestern University
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Abstract

We conducted the first randomized controlled field experiment of an Internet reputation mechanism. A high-reputation, established eBay dealer sold matched pairs of lots— batches of vintage postcards—under his regular identity and under new seller identities (also operated by him). As predicted, the established identity fared better. The difference in buyers’ willingness-to-pay was 8.1% of the selling price. A subsidiary experiment followed the same format, but compared sales by relatively new sellers with and without negative feedback. Surprisingly, one or two negative feedbacks for our new sellers did not affect buyers’ willingness-to-pay.

Keywords

Field experimenteBayReputation

JEL classification

Z13: Economic Sociology • Economic Anthropology • Language • Social and Economic Stratification L14: Transactional Relationships • Contracts and Reputation • Networks D82: Asymmetric and Private Information • Mechanism Design
Type
Research Article
Information
Experimental Economics , Volume 9 , Issue 2 , June 2006 , pp. 79 - 101
Copyright
Copyright © 2006 Economic Science Association

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