Trust and Experience in Online Auctions

This paper aims to shed light on the complexities and difficulties in predicting the effects of trust and the experience of online auction participants on bid levels in online auctions. To provide some insights into learning by bidders, a field study was conducted first to examine auction and bidder characteristics from eBay auctions of rare coins. We proposed that such learning is partly because of institutional-based trust. Data were then gathered from 453 participants in an online experiment and survey, and a structural equation model was used to analyze the results. This paper reveals that experience has a nonmonotonic effect on the levels of online auction bids. Contrary to previous research on traditional auctions, as online auction bidders gain more experience, their level of institutional-based trust increases and leads to higher bid levels. Data also show that both a bidder’s selling and bidding experiences increase bid levels, with the selling experience having a somewhat stronger effect. This paper offers an in-depth study that examines the effects of experience and learning and bid levels in online auctions. We postulate this learning is because of institutional-based trust. Although personal trust in sellers has received a significant amount of research attention, this paper addresses an important gap in the literature by focusing on institutional-based trust

Economic Insights from Internet Auctions: A Survey

This paper surveys recent studies of Internet auctions. Four main areas of research are summarized. First, economists have documented strategic bidding in these markets and attempted to understand why sniping, or bidding at the last second, occurs. Second, some researchers have measured distortions from asymmetric information due, for instance, to the winner's curse. Third, we explore research about the role of reputation in online auctions. Finally, we discuss what Internet auctions have to teach us about auction design.

Decisions under Uncertainty in Decentralized Online Markets: Empirical Studies of Peer-to-Peer Lending and Outsourcing

Recent developments in information technologies, especially Web 2.0 technologies, have radically transformed many markets through disintermediation and decentralization. Lower barriers of entry in these markets enable small firms and individuals to engage in transactions that were otherwise impossible. Yet, the issues of informational asymmetry that plague traditional markets still arise, only to be exacerbated by the "virtual" nature of these marketplaces. The three essays of my dissertation empirically examine how participants, many of whom are entrepreneurs, tackle the issue of asymmetric information to derive benefits from trade in two different contexts. In Essay 1, I investigate the role of online social networks in mitigating information asymmetry in an online peer-to-peer lending market, and find that the relational dimensions of these networks are especially effective for this purpose. In Essay 2, I exploit a natural experiment in the same marketplace to study the effect of shared geographical ties on investor decisions, and find that "home bias" is not only robust but also has an interesting interaction pattern with rational decision criteria. In Essay 3, I study how the emergence of new contract forms, enabled by new monitoring technologies, changes the effectiveness of traditional signals that affect a buyers' choice of sellers in online outsourcing. Using a matched-sample approach, I show that the effectiveness of online ratings and certifications differs under pay-for-time contracts versus pay-for-deliverable contracts. In all, the three essays of my dissertation present new empirical evidence of how agents leverage various network ties, signals and incentives to facilitate transactions in decentralized online markets, form transactional ties, and reap the benefits enabled by the transformative power of information technologies

Examining Inefficiencies and Consumer Uncertainty in E-Commerce

The popularity of e-commerce can be attributed to open (and mostly unbridled) competition with minimal barriers to entry. Yet, recent surveys suggest a general lack of consumer confidence in transacting online. Such findings are troubling — pointing to probable inefficiencies in e-commerce. The question then is: what are these inefficiencies and how do they prompt such consumer uncertainty? In answering the question, this paper surfaces three core e-commerce inefficiencies: seller anonymity, lack of product transparency, and lack of process transparency. It is also contended that consumer uncertainty is not an intrinsic buyer characteristic. Rather, it is contingent upon the information specificity of specific products that consumers transact in B2C and C2C e-commerce. Tying together threads from behavioral economics, this paper offers a novel perspective toward understanding electronic market inefficiencies and its consequent effects on consumer uncertainty. Apart from proposing a model of consumer uncertainty in e-commerce, the study offers a preliminary empirical validation of the proposed model. Findings suggest that inherent Ecommerce inefficiencies of anonymity and lack of product and process transparencies cause consumer uncertainty. The findings further evidence how buyer uncertainty increases when planning to buy products with high information specificity, especially when product transparency is lacking

SELLER-BUYER TRUST IN CROSS-BORDER E-COMMERCE: A CONCEPTUAL MODEL

We conceptualize and propose a theoretical model of sellers’ trust in buyers in the cross border e-commerce context. This model is based on by signalling theory, which is further refined by using trust theories and empirical findings from prior e-commerce trust research. _x000D_ _x000D_ Keywords: buyer-seller trust, cross-border, e-commerce, signalling theory, trust theory, small and medium sized._x000D

Website Signal Perceptions and Seller Quality Identification

This study extends the understanding of signaling in online shopping environments by evaluating website signal perceptionsof online buyers. Drawing from signaling theory, this study proposes and empirically tests a model for conceptualizing theinfluence of website signal perceptions on perceived trust, perceived deception and purchase intentions. Experimental resultssupport the assertions of the model and indicate that the online buyers’ perceptions and purchase intentions are mainlyinfluenced by website content and website physical presence, whereas human presence and website policy credibility are lesssignificant. In addition, there is evidence that signal perceptions change depending on the quality of online sellers. Whendealing with low-quality online sellers, online buyers are concerned with physical and human presence. When evaluatinghigh-quality sellers, online buyers are concerned with website amateurism

The theory of the lemon markets in IS research

The “lemon” problem was initially posed by Nobel Prize winner Akerlof in his seminal article of 1970 and showed how a market with unbalanced information, called information asymmetry, can lead to complete disappearance or to offerings with poor quality where bad products (lemons) wipe out the good ones. Empirical evidence for Akerlof’s theory came originally from the market of used cars, where the lemon is a well known problem. However the theoretical model of the “lemon” problem has proven also to be valid on other markets and in comparable situations like internal markets. The theory is also been used more and more in IS research especially since the emerging e-commerce initiatives and the continuous growth of e-markets and auctions. In this chapter we bring a description of the theory by presenting its nomological network and its linkages to other well known theories in IS research. The relevance for the theory is shown to explain phenomenon’s in the IS discipline. An overview is given of current and past IS articles using the Lemon Market theory (LMT) together with a bibliographical analysis of the references to the original Akerlof article