Data Mining in Electronic Commerce

Modern business is rushing toward e-commerce. If the transition is done properly, it enables better management, new services, lower transaction costs and better customer relations. Success depends on skilled information technologists, among whom are statisticians. This paper focuses on some of the contributions that statisticians are making to help change the business world, especially through the development and application of data mining methods. This is a very large area, and the topics we cover are chosen to avoid overlap with other papers in this special issue, as well as to respect the limitations of our expertise. Inevitably, electronic commerce has raised and is raising fresh research problems in a very wide range of statistical areas, and we try to emphasize those challenges.Comment: Published at http://dx.doi.org/10.1214/088342306000000204 in the Statistical Science (http://www.imstat.org/sts/) by the Institute of Mathematical Statistics (http://www.imstat.org

Reputation in multi agent systems and the incentives to provide feedback

The emergence of the Internet leads to a vast increase in the number of interactions between parties that are completely alien to each other. In general, such transactions are likely to be subject to fraud and cheating. If such systems use computerized rational agents to negotiate and execute transactions, mechanisms that lead to favorable outcomes for all parties instead of giving rise to defective behavior are necessary to make the system work: trust and reputation mechanisms. This paper examines different incentive mechanisms helping these trust and reputation mechanisms in eliciting users to report own experiences honestly. --Trust,Reputation

A Hybrid Artificial Reputation Model

Agent interaction in a community such as an online buyer-seller scenario is often risky and uncertain. An agent interacts with other agents where initially they know nothing about each other. Currently many reputation models are developed that help consumers select more reputable and reliable service providers. Reputation models also help agents to make a decision on who they should trust and transact with in the future. These reputation models are either built on interaction trust that involves direct experience as a source of information, or they are built upon witness information, also known as word-of-mouth, that involves the reports provided by others. Neither the interaction trust nor the witness information models alone fully succeed in such uncertain interactions. This thesis research introduces the hybrid reputation model combining both interaction trust and witness information to address the shortcomings of existing reputation models when taken separately. Experiments reveal that the hybrid approach leads to better selection of trustworthy agents where consumers select more reputed service providers, eventually lead to more gains by the consumer. Furthermore, the trust model developed is used in calculating trust values of service providers for the case study with a live website ecommerce

Aggregating partial, local evaluations to achieve global ranking

We analyze some voting models mimicking online evaluation systems intended to reduce the information overload. The minimum number of operations needed for a system to be effective is analytically estimated. When herding effects are present, linear preferential attachment marks a transition between trustful and biased reputations.Comment: 9 pages, 5 figures, accepted for publication in Physica

Congrats: a Configurable Granular Trust Scheme for Effective Seller Selection in an E-marketplace

Problem. The e-marketplace of today, with millions of buyers and sellers who never get to meet face to face, is susceptible to the presence of dishonest and fraudulent participants, prowling on unsuspecting trading partners to cheat in transactions, thereby increasing their profit to the detriment of their victims. There is also the multiplicity of goods and services with varying prices and quality, offered by a mix of honest and dishonest vendors. In order to participate in trade without incurring substantial loss, participants rely on intelligent agents using a trust evaluation scheme for partner selection. Making good deals thus depends on the ability of the intelligent agents to evaluate trading partners and picking only trustworthy ones. However, the existing trust evaluation schemes do not adequately protect buyers in the e-marketplace; hence, this study focused on designing a new trust evaluation scheme for buyer agents to use to effectively select sellers. -- Method. To increase the overall performance of intelligent agents and to limit loss for buyers in an e-marketplace, I propose CONGRATS—a configurable granular trust estimation scheme for effective seller selection. The proposed model used historical feedback ratings from multiple sources to estimate trust along multiple dimensions. I simulated a mini e-marketplace to generate the data needed for performance evaluation of the proposed model alongside two existing trust estimation schemes—FIRE and MDT. -- Results. At the peak of performance of CONGRATS, T1 sellers with the highest trust level accounted for about 45% of the total sales as against less than 10% recorded by the least trustworthy (T5) sellers. Compared to FIRE and MDT, CONGRATS had a performance gain of 15% and 30%, respectively, as well as an average earning of 0.89 (out of 1.0) per transaction in contrast to 0.70 and 0.62 per transaction respectively. Cumulative utility gain among buyer groups stood at 612.35 as contrasted to 518.96 and 421.28 for the FIRE and MDT models respectively. -- Conclusions. Modeling trust along multiple dimensions and gathering trust information from many different sources can significantly enhance the trust estimation scheme used by intelligent agents in an e-marketplace. This means that more transactions will occur between buyers and sellers that are more trustworthy. Inarguably, this will reduce loss to an infinitesimal level and consequently boost buyer confidenc

Preliminary specification and design documentation for software components to achieve catallaxy in computational systems

This Report is about the preliminary specifications and design documentation for software components to achieve Catallaxy in computational systems. -- Die Arbeit beschreibt die Spezifikation und das Design von Softwarekomponenten, um das Konzept der Katallaxie in Grid Systemen umzusetzen. Eine Einführung ordnet das Konzept der Katallaxie in bestehende Grid Taxonomien ein und stellt grundlegende Komponenten vor. Anschließend werden diese Komponenten auf ihre Anwendbarkeit in bestehenden Application Layer Netzwerken untersucht.Grid Computing

Economic Concepts of Organic Certification

Certification is a key element in marketing organic food products. Based on economic theory, this report wants to illustrate the economic reasoning for certification. The intention is to provide a description of economic concepts, which is understandable for a wider audience. We are focusing on the basic economic literature. Chapter 1 “Organic certification system” describes the current control system in the European Union. Why this is necessary, will then be explained based on a synopsis of economic literature. Of specific significance for organic certification and the CERTCOST project are the concepts of institutional economics and economics of crime. The relevant points of economic theory will be presented and discussed in chapter 2 “Theoretical framework”. Finally, the costs and benefits of organic certification will be illustrated in chapter 3 “Costs and benefits of organic certification”

Please, talk about it! When hotel popularity boosts preferences

Many consumers post on-line reviews, affecting the average evaluation of products and services. Yet, little is known about the importance of the number of reviews for consumer decision making. We conducted an on-line experiment (n= 168) to assess the joint impact of the average evaluation, a measure of quality, and the number of reviews, a measure of popularity, on hotel preference. The results show that consumers' preference increases with the number of reviews, independently of the average evaluation being high or low. This is not what one would expect from an informational point of view, and review websites fail to take this pattern into account. This novel result is mediated by demographics: young people, and in particular young males, are less affected by popularity, relying more on quality. We suggest the adoption of appropriate ranking mechanisms to fit consumer preferences. © 2014 Elsevier Ltd