The Impact of Reputation on eBay Transactions: A Controlled Experiment, Study notes of Computers and Information technologies

Download The Impact of Reputation on eBay Transactions: A Controlled Experiment and more Study notes Computers and Information technologies in PDF only on Docsity! The Value of Reputation on eBay: A Controlled Experiment Andrew Berry 11/25/08 Internet Market • No outside instrument of reputation • Temptation for sellers to misrepresent products is great • Temptation to sloth – Example: Ship slowly after receiving payment • Buyers are forced to assume risk – Should lower the price buyers are willing to pay Prior Studies • Observational studies of a set of items whose sellers had varying reputations • Studies correlate reputations with auction outcomes • Most studies found that buyers paid more to sellers with better reputations Observational Studies • Can only examine reputation in markets for standardized goods • Plagued by omitted variable bias – Discussion: What factors could lead to OMVB? Prior Work • Shows that reputation affects: – Probability of a sale – Price – Probability that bidders enter an auction – Number of bids in the auction – Assessment of a seller’s trustworthiness eBay Reputation System • To leave feedback a transaction must have occurred • Buyer and seller can rate each other • Opportunity for a one-line text comment • Rated individuals can respond to comments that they feel are unfair eBay Reputation System • A buyer can click the net score in order to see a detailed breakdown • Scroll to see individual comments • Users may change identity by registering again • No search mechanism to find negatives General Page All Categories Search Categories * | Motors | Stores (ERED (2) Back to previous search > Community > My World > marib eBay My World: mzrib (1034 w ) fens Feedback earned for transactions on eBay View your eBay My World page Positive Feedback: 99.9% Feedback score: 1034 Detailed Seller Ratings (last 12 months) How is Feedback calculated? Criteria Average rating Number of ratings Item as described oko donk 197 Communication kok dk 790 Shipping time kkk mH Member since: flow" 16-02 Shipping and handling charges kkkkt 789 Views: 673 total {tems for sale Latest Feedback KW MW See all Visit my store Sales @ 44+ This wil be 2 areat Christmas git Thanks forthe om # {7O2TSTABSST a 2 fast service No 2 oe Buyer mosierim (23 Y ) Listings BATTERY AND Store CHARGER FOR HDV188 or HDV178_ . JAZZ ELITE mo . . _ oy, mzrib super store Feedback Profile Feedback Profile marib ( 1034 ae) sean" (g) Positive Feedback (last 12 months}: 99.9% [How is F& fercentage calculated” Member since: Nov-16-02 in United States Recent Feedback Ratings (last 12 months) ® Detailed Seller Ratings (last 12 maft€®<) > Member Quick Links imonth months 12 months Criteria Average rating Numberof ratings Contact member View items for sale @ Positive 369 13 jog9 ‘tem as described tok totk 197 Vea Communication toto dot 730 tew sellers Store © Neutral 2 7 8 Shipping time tot aa 74 View more options ¥ Negative 1 1 1 | Shipping and handling charges (a oe kok 788 Feedback asaseller Feedback asabuyer | All Feedback | Feedback left for othe! 4115 Feedback received (viewing 1-25) Feedback From / Price © AAAs This willbe a great Christmas git. Thanks forthe fast senice Buyer: mosieim (23 3 ) Jazz Elite HDV 188 HighDefinition Camcorder 11MP Camera (#170273748337) US $129.99 @ Great transaction. Buyer: texasphotos (777 9) NEW Kids Digital Cameras, Video Clips, Preview screen (#170271349646) US $21.99 @ Thanks Buyer: dadotakes See what's new Revised Feedback: 0 2 Date / Time Nov-20-08 19:27 View Item Nov-20-08 19:22 View Item Nov-20-08 17:01 Key Areas • Positive Feedback Ratings – The percentage of positive ratings left by members in the last 12 months. – This is calculated by dividing the number of positive ratings by the total number of ratings (positive + neutral + negative). Feedback Profile Feedback Profile marib ( 1034 ae) sean" (g) Positive Feedback (last 12 months): 99.9% [How is Feedback Percentage calculated?] Member since: Nov-16-02 in United States Recent Feedback Ratings (last 12 months) ® Detailed Seller Ratings (last 12 maft€®<) > Member Quick Links imonth months 12 months Criteria Average rating Numberof ratings Contact member View items for sale @ Positive 369 13 jog9 ‘tem as described tok totk 197 Vea Communication toto dot 730 tew sellers Store © Neutral 2 7 8 Shipping time tot aa 74 View more options ¥ Negative 1 1 1 | Shipping and handling charges (a oe kok 788 Feedback asaseller Feedback asabuyer | All Feedback | Feedback left for othe! 4115 Feedback received (viewing 1-25) Feedback From / Price © AAAs This willbe a great Christmas git. Thanks forthe fast senice Buyer: mosieim (23 3 ) Jazz Elite HDV 188 HighDefinition Camcorder 11MP Camera (#170273748337) US $129.99 @ Great transaction. Buyer: texasphotos (777 9) NEW Kids Digital Cameras, Video Clips, Preview screen (#170271349646) US $21.99 @ Thanks Buyer: dadotakes See what's new Revised Feedback: 0 2 Date / Time Nov-20-08 19:27 View Item Nov-20-08 19:22 View Item Nov-20-08 17:01 Key Areas • Detailed Seller Ratings – provide more details about this member’s performance as a seller – Five stars is the highest rating, and one star is the lowest – These ratings do not count toward the overall Feedback score and they are anonymous – Sellers cannot trace detailed seller ratings back to the buyer who left them Feedback Profile Feedback Profile marib ( 1034 ae) sean" (g) Positive Feedback (last 12 months): 99.9% [How is Feedback Percentage calculated?] Member since: Nov-16-02 in United States Recent Feedback Ratings (last 12 months) ® Detailed Seller Ratings (last 12 maft€®<) > Member Quick Links imonth months 12 months Criteria Average rating Numberof ratings Contact member View items for sale @ Positive 369 13 jog9 ‘tem as described tok totk 197 Vea Communication toto dot 730 tew sellers Store © Neutral 2 7 8 Shipping time tot aa 74 View more options ¥ Negative 1 1 1 | Shipping and handling charges (a oe kok 788 Feedback asaseller Feedback asabuyer | All Feedback | Feedback left for othe! 4115 Feedback received (viewing 1-25) Feedback From / Price © AAAs This willbe a great Christmas git. Thanks forthe fast senice Buyer: mosieim (23 3 ) Jazz Elite HDV 188 HighDefinition Camcorder 11MP Camera (#170273748337) US $129.99 @ Great transaction. Buyer: texasphotos (777 9) NEW Kids Digital Cameras, Video Clips, Preview screen (#170271349646) US $21.99 @ Thanks Buyer: dadotakes See what's new Revised Feedback: 0 2 Date / Time Nov-20-08 19:27 View Item Nov-20-08 19:22 View Item Nov-20-08 17:01 Key Areas • All Feedback – Provides feedback from all transactions – Detailed user comments from transaction history Experimental Setup • 8 eBay identities – STRONG • Net score of 2000 with one negative feedback – NEW • 7 new eBay identities with no feedback • Matched 200 items sold by STRONG with one of the new sellers Experimental Setup • Vintage postcards sold – Asymmetry between seller and buyer about condition – No established book value to guide buyers • 12 week experiment • 5 new sellers presented 20 lots each for sale • 2 sellers presented 50 lots each Experimental Setup • To prevent customers from identifying the experiment: – Lots listed in a category that has thousands of lots for sale – New sellers had slightly different format for listings – Each half of each matched pair was listed at different times Hypotheses • Hypothesis 1: – Buyers will view an established seller as less risky and pay more • Hypothesis 2: – New sellers with negative feedback will reap lower profits than those without negative feedback • Thoughts on these hypotheses or the experimental setup? Imperfect Observation • Neither STRONG nor NEW sell – Gives little information • Either STRONG or NEW sells – Provides a lower or upper bound on the ratio of a buyer’s willingness to pay • Both STRONG and NEW sell – Ideal situation Slight Detour • Censored Normal Regression Models – Arise when the variable of interest is observable in certain conditions – OLS is biased when the variable is unobservable – Use these models when the independent variable is known, but the dependent variable is not • Allows us to include data where either NEW or STRONG sold Results • Censored normal estimation – Parametric Estimate – Used lots where either or both sellers sold • Estimated mean difference is significant – P = .044 • Suggests buyers are willing to pay 8.1% more for lots sold by STRONG Results • Second experiment shows negatives in a brief reputation don’t necessarily hurt revenues • NEW sellers without negatives sold 16 of 35 lots • NEW sellers with negatives sold 14 of 35 lots • No significant differences • Sellers without negatives often received lower prices when they did sell – Favored sellers without negatives 9 times – Favored sellers with negatives 11 times Threats to Validity • Experiment 1 – Differences in listing quality – Repeat customers and private reputation – Multiple purchases • Experiment 2 – Small sample size – Profile Design – Timing of negative feedback