ONLINE SELLERS\u27 TRUST AND USE OF ONLINE AUCTION MARKETPLACES

More and more people sell things online and trust is an important factor in online selling. This research is aimed at understanding the roles of trust in online sellers\u27 continued use of online auction marketplaces. Given the uniqueness of online auction practice, we identify the need for differentiating sellers\u27 trust in the intermediary and in buyers. A balanced view of cognitive and affective trust is incorporated with the Motivational Model of technology acceptance to predict sellers\u27 use of online auction marketplaces. Empirical data collected from online auction sellers in uBid.com confirmed our model. Specifically, our findings show that, for online auction sellers, (1) trust has both cognitive and affective components; (2) trust in the intermediary (e.g., eBay.com) impacts trust in the community of buyers through the trust transference mechanism; (3) trusting attitudes antecede user acceptance and use factors including perceived usefulness and perceived enjoyment, which in turn influence sellers\u27 intention to return;; and (4) perceived enjoyment is an important antecedent of sellers\u27 retention. Besides theoretical contributions, this research also has practical implications

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

Country-Specific Effects of Reputation and Information: A Comparison of Online Auctions in Germany, the UK, and the US

Empirical studies on the effect of sellers’ reputation on closing prices in online auctions present mixed results. A large number of studies addresses reputational effects in one country, especially in the US. Only a small number of cross-country studies inspect the moderating role of institutional frameworks on bidder behavior. The purpose of this paper is to examine if country-specific differences in the formal and informal institutional framework influence the effects of reputation and information signals on final prices in online auctions. From the perspective of the New Institutional Economics, management decisions and individuals’ characteristics are affected by the institutional framework, which consists of cultural aspects as well as a set of social and legal rules and regulations. Therefore, bidders that are influenced by one institutional framework have different preferences, expectations, and perceptions about reputation and information in online auctions than individuals socialized by another institutional framework. In order to examine the effects of reputation and information on prices as well as to asses cross-country similarities and differences in these effects, a sample of 6,166 homogenous online auctions, conducted on the respective eBay websites in Germany, the UK, and the US, is analyzed. The results suggest that either the effects of reputation and product information variables vary significantly across countries or that different variables have an impact on prices in different countries. It can be concluded that country-specific institutional frameworks influence bidder behavior in international online auction markets.reputation, information, online auctions, cross-country studies

Proactive or Reactive? Platform Governance Strategy in C2C Marketplace

In this paper, we present a case study of two major consumer-to-consumer marketplaces that adopt different platform governance strategies and examine how the users of each marketplace trust other users and the marketplace platforms. Our study was conducted in two steps: qualitative and quantitative research. As a first step, we conducted interviews with the directors of the two platforms. As the second step, we conducted user survey to assess the user perception of platform governance strategies. The preliminary finding from our interview with the operators of two major C2C marketplaces shows that the both operators acknowledge an effective governance system as the key factor of success, but adopt different approaches to ensure effectiveness. Two different strategies for platform governance are adopted: proactive and reactive. The preliminary finding from our user survey indicates that users perceive a reactive strategy as more effective compared to a proactive strategy

Web Elements and Strategies for Success in Online Marketplaces: An Exploratory Analysis

Among the most prominent and fastest-growing markets on the Internet are online marketplaces. The leader and main exemplar of this type of market is eBay. In this paper, we provide a comprehensive examination of the salient website elements and strategies as success factor in online marketplaces. In this exploratory analysis, we report on the behavior of different types of sellers and their distinct approaches for achieving their desired goals. The conceptual framework for this examination is based on marketing mix theory and its synthesis with competitive heterogeneity theory, allowing us to formulate a success model for sellers operating in this market. The conceptual model is empirically tested by the random collection of over 2000 auction listings from eBay’s Motors Division spread over a period of six months. Our results bring to light the presence of different types of sellers in this market, and the differences in website designs and strategies they use for success in this market

Building Effective Online Marketplaces with Institution-Based Trust

Despite the inherent risk arising from separating buyers and sellers, networked online marketplaces are proliferating. We describe how online auction marketplaces take advantage of institutional structures to build buyer trust in auction sellers, mitigate risk, increase satisfaction, and promote transaction intentions. It is hypothesized, based on institutional trust (Zucker 1986), that buyer trust in auction sellers can be increased, beyond past experience with sellers, through structural assurances, such as buyer-driven certification, auction house escrows, and credit card guarantees. We examined buyer transaction intentions, mediated by trusting beliefs, risk reduction, and satisfaction. The model is tested with 274 buyers in Amazonís online auction marketplace. The results support the hypotheses, highlighting the importance of institution-based trust in online networks. Implications are discussed

Coevolution of trustful buyers and cooperative sellers in the trust game

Many online marketplaces enjoy great success. Buyers and sellers in successful markets carry out cooperative transactions even if they do not know each other in advance and a moral hazard exists. An indispensable component that enables cooperation in such social dilemma situations is the reputation system. Under the reputation system, a buyer can avoid transacting with a seller with a bad reputation. A transaction in online marketplaces is better modeled by the trust game than other social dilemma games, including the donation game and the prisoner's dilemma. In addition, most individuals participate mostly as buyers or sellers; each individual does not play the two roles with equal probability. Although the reputation mechanism is known to be able to remove the moral hazard in games with asymmetric roles, competition between different strategies and population dynamics of such a game are not sufficiently understood. On the other hand, existing models of reputation-based cooperation, also known as indirect reciprocity, are based on the symmetric donation game. We analyze the trust game with two fixed roles, where trustees (i.e., sellers) but not investors (i.e., buyers) possess reputation scores. We study the equilibria and the replicator dynamics of the game. We show that the reputation mechanism enables cooperation between unacquainted buyers and sellers under fairly generous conditions, even when such a cooperative equilibrium coexists with an asocial equilibrium in which buyers do not buy and sellers cheat. In addition, we show that not many buyers may care about the seller's reputation under cooperative equilibrium. Buyers' trusting behavior and sellers' reputation-driven cooperative behavior coevolve to alleviate the social dilemma.Comment: 5 figure

Exploring the Role of Social Community Within an E-Marketplace

Marketplaces have provided a meeting place for communities to socialise, exchange information and transact business for many centuries. It is perhaps a natural progression that the inclusion of social network facilities should be an intrinsic part of e-marketplace development. This exploratory study examines the concept of designing social features into an e-marketplace by considering the needs of online community members. Using TradeMe, a New Zealand horizontal intermediary e-marketplace, as an illustrative case study it was found that the use of an online community to encourage information flow, reciprocity and trust has resulted in a vibrant, successful business model. Further research is required to investigate the viability of the community model beyond the case illustrated

The Role of Dealers in Electronic Markets: Empirical Insights from Online Auctions

This study examines the impact of intermediaries (dealers) in online Consumer-to-Consumer (C2C) market. Online C2C transactions, such as the Internet auctions on eBay, are one of the most successful forms of electronic commerce (e-commerce). It has been suggested by many scholars that the Internet or electronic markets will eliminate intermediaries by lowering search cost and allowing direct and efficient interactions between sellers and buyers. However, a close examination of the market mechanism indicates that many functions provided by intermediaries are indispensable. Specifically, we consider intermediaries’ role in price discovery and trust building in electronic markets. Intermediaries provide a buffer for temporary misalignment between supply and demand by buying low and selling high, which provides product liquidity to buyers and sellers in online markets. Intermediaries also help build trust by engaging in transactions with risk-averse buyers and sellers who otherwise will not participate in the market. Using a dataset from eBay’s online auctions, we examine empirically these two functions in online C2C auction markets. We find that the presence of dealers has a significant impact on market liquidity, resulting in more successful trades and higher auction prices. In addition, we find that dealers are more likely to engage in transactions with less established sellers. Their presence reduces the reputation penalty faced by these players and further facilitates the success of auctions