Does Online Reputation Matter? An Empirical Investigation of Reputation and Trust in Online Auction Markets

Trust is an essential component of buyer-seller relationships, especially for online transactions. Appropriate feedback mechanisms help buyers build trust towards reputable sellers. Drawing from sociology and economics, we show that buyers pay a price premium to transact with reputable sellers, especially for expensive products. To empirically examine the relationship between feedback and price premiums, we collected data for 19 products from 702 completed online auctions from the auction site of ebay.com (www.ebay.com). Results showed a significant correlation between feedback and price premiums for all products. This correlation became increasingly significant for more expensive products. This paper contributes to a better understanding of the value of reputation and trust in EC

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

One size does not fit all: the differential impact of online reviews

There has been plenty of research on the impact of online reviews on product sales in the last decade. However, prior studies don’t always reach the same conclusions. Literature review indicates that, because of data limitations, prior studies treat the consumers as homogeneous and ignore their individual characteristics. There has only been very limited research that delves into the characteristics of the products being reviewed. Do online reviews have the same impact on consumers who may have different shopping habits or demographic characteristics? Do online reviews also impact the sales of all products/services to the same extent? Using a unique dataset that includes individually identifiable consumer online review browsing data and purchase data, this paper analyzes the effect of online reviews from a more nuanced perspective by examining how individual consumer shopping characteristics and vendor characteristics moderate the effect of online reviews as well as vendors’ marketing activities

Trusted Third Parties in the Electronic Marketplace: An Evolutionary Game Approach

Using an evolutionary game approach, this paper studies different equilibria in the electronic marketplace, and demonstrates that electronic transaction through a TTP is an evolutionarily stable strategy. According to the evolutionary game analysis, people will gradually adopt this strategy in the electronic marketplace

Solving the Information Overload Problem: The Role of Unconscious Thought in Enhancing Online Purchasing Decisions

The prosperity of online shopping has led e-commerce vendors to provide increasingly rich information to enhance consumers’ shopping experience and satisfaction. However, there is little awareness that consumers cannot tolerate too much information. As human beings have a limited capacity to process information, online shoppers are easily confused when facing rich information, particularly when the information greatly exceeds their processing capacity. In contrast to previous research, which has focused on the formatting of appropriate information or user interfaces to solve the overload problem, this study explored a new solution based on the role of unconscious as opposed to conscious thought. By combining perspectives from the Unconscious Thought Theory.and Information Processing Theory in a unified model, we examined the role of thinking mode in consumers’ decision satisfaction, as well as information processing factors that affect the efficiency of unconscious thought in the presence of rich information. Results show that unconscious thought is an effective way to solve the information overload problem and is thus worthy of special attention in the design of e-commerce web pages. The study also contributes to both unconscious thought theory and information processing theory by exploring the interaction of the quality and quantity of information with thinking mode in affecting the quality of purchasing decisions

An Empirical Analysis of Virtual Goods Pricing Strategies in Virtual Worlds

3D Virtual worlds are computer mediated environments intended for the users to inhabit and interact via their representational avatars. Trading virtual goods in 3D virtual worlds plays an important role in realizing the virtual economy. This essay examines the impact of the unique virtual goods permission settings (Copy, Modify, and transfer) on creators’ pricing strategies. We collect data of virtual items from the Second Life marketplace XStreet to explore the factors that affect virtual goods prices. We use ANOVA to test the relationship between each permission and price, and conduct random effects model to investigate how permissions affect price in different categories. Our empirical results show that “Copy” permission, which might be regarded to reduce the profit of the creators, has a positive effect in virtual goods pricing strategies. Virtual items are more likely to be assigned “Copy” which seems to give additional duplicates for free. Furthermore, prices of virtual goods with “Copy” permission are higher than those without, and the more copies a consumer wants, the higher the price difference between the items with “Copy” and those without “Copy” permission. The effects of other issues on virtual goods prices are analyzed and managerial implications are discussed