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

The Effect of Online Feedback Mechanisms in Electronic Markets: A Field Study Perspective

Online feedback mechanism, best known right now for building trust and reputation in electronic markets, are regarded as a major player in the success of many online trading communities. It can reduce sellers’ anonymities, mitigate the buyers’ risks, and affect the price premiums. In this paper, we investigate the relationship between feedback mechanisms and price premiums by the analysis of field data. An intelligent agent is build to collect actual data from Yahoo Auction. The research results will also allow us to better understand whether positive/negative rating has different effects. It may also clarify mediating effects of product characteristics on the relationship between reputation systems and price premiums

The Value of Third-Party Certification of Preconditioning Claims at Iowa Feeder Cattle Auctions

After controlling a variety of feeder cattle characteristics and market and sale conditions, we estimate the price premiums for preconditioning (vaccinations and minimum 30 days weaning) claims with and without third-party certification (TPC) as $6.15/cwt and$3.40/cwt, respectively, in Iowa feeder cattle auctions. These premiums differ statistically (p-value less than 0.0001) and their difference exceeds the additional participation cost of TPC ($1/cwt) on average. This indicates that the third party certification is valued in the market to credibly signal preconditioning investment under asymmetric information.

The Impact of Impression Management on Purchase Intentions in Online Auctions: The Moderating Effects of Relationship Norms

The IT-mediated nature of e-commerce creates the uncertainty in online buyer-seller relationships where online buyers are difficult to personally scrutinize sellers, leading to many challenges for online sellers to win buyers’ trust. In order to overcome this problem, according to impression management theory and relationship theory, this research proposes a research framework for understanding how impression management tactics can be used by sellers to create a positive impression in the minds of buyers, affect buyers’ trust in the sellers, and subsequently purchase from them. This research further examines the moderating role of relationship norms on the relationship between impression management tactics and trust. A Web-based survey is then conducted in Yahoo! Taiwan auction to validate our proposed framework. Our research is expected to contribute to the theories by first examining the impression management theory and relationship theory in the context of online auctions. We also expect to contribute to the practice by illustrating that sellers should adjust their impression management tactics to suit buyers’ relationship norms. Specifically, self-focused tactics are more useful for buyers in an exchange relationship; other-focused tactics are more effective for buyers in a communal relationship

Online reviews and consumers\u27 willingness to pay: the role of uncertainty

Empirical studies of online reviews have found that valence (average rating) has a consistently positive impact on consumers’ willingness to pay (WTP), but volume does not. Although two studies tried to explain this phenomenon using different perspectives (Wu and Ayala, 2012; Sun, 2012), neither study can fully accommodate the consumer behaviors observed by the other. This dissertation adopts a theoretical framework that can explain the consumer behaviors observed in both studies as well as the varying influence of review volume at the individual level. Specifically, several studies were conducted to investigate the relationship between bidirectional online seller reviews (e.g., the eBay review format) and consumers’ WTP. Essay 1 provides an extensive review of studies that investigate online consumer reviews at the market, product, firm, consumer, and message level; special attention is given to the outcomes of consumer reviews for both products and sellers. In addition, this essay establishes the importance of the current research topic. Essay 2 combines economic and behavioral theories of decision-making under uncertainty to develop a theoretical framework. The framework proposes that review volume and valence influence a consumer’s WTP through a weighting function of outcome probability. Consumers with different preferences towards uncertainty will have different preferences toward review volume, and for some consumers, such preference can change depending on the review valence. Based on this conceptualization, the framework reconciles the current literature by explaining the inconsistent influence of review volume both across and within individuals. The internal validity of the framework is tested with an experiment and analyses carried out at the individual level provide strong support for the proposed conceptual model. Essay 3 establishes the relevance of this research for managers by applying the framework to real market data. Due to the nature of the transactional data, a finite mixture model is used to estimate the weighting function, and hypotheses are tested at the group instead of the individual level. A simulation study demonstrates the validity of using a finite mixture model to estimate the weighting function and classify groups. The results of the hypotheses testing provide adequate support for the framework

Do Online Consumers Value Corporate Social Responsibility More in Times of Uncertainty?: Evidence from Online Auctions Conducted During the Onset of the COVID-19 Pandemic

The relationships between Corporate Social Responsibility (CSR) and consumer behaviors have been widely explored in the literature. From the consumer standpoint, it has been shown that individuals largely want to be socially responsible actors and that, more than ever, they consider the CSR aspects of products or services when contemplating purchasing decisions. We utilize data from 23,247 online auctions conducted before and during the COVID-19 pandemic to analyze in what way consumer preferences might be influenced by how the CSR characteristics of products are touted in their descriptions. We find that a greater CSR emphasis is positively associated with an increased prospect of an online auction item selling. Additionally, we find CSR is valued more by consumers during a period of economic hardship and social uncertainty (COVID-19). Finally, we find that profit-seeking behaviors by intermediary auction house brokers undermine the effect of CSR on consumer purchasing behavior

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

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