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Buyer feedback as a filtering mechanism for reputable sellers

By Paolo Laureti, Frantisek Slanina, Yi-Kuo Yu and Yi-Cheng Zhang

Abstract

We propose a continuum model for the description of buyer and seller dynamics in an Internet market. The relevant variables are the research effort of buyers and the sellers' reputation building process. We show that, if a commercial website gives consumers the possibility to rate credibly sellers they bargained with, vendors are forced to be more honest. This leads to mutual beneficial symbiosis between buyers and sellers; the overall enhanced volume of transactions contributes ultimately to the website, which facilitates the matchmaking service.Asymmetric information, Internet commerce, Reputation mechanism

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