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ABSTRACT
Trust between people engaging in economic transactions affects the economic growth of their community. Reputation management systems, such as the Feedback Forum of eBay Inc., can increase the trust level of the participants. We show in this paper that experimental economics can be used in a controlled laboratory environment to measure trust and trust enhancement. Specifically, we present an experimental study that quantifies the increase in trust produced by two versions of a reputation management system. We also discuss some emerging issues in the design of reputation management systems.
REFERENCES
Note: OCR errors may be found in this Reference List extracted from the full text article. ACM has opted to expose the complete List rather than only correct and linked references.
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F. Fukuyama, Trust: The Social Virtues and the Creation of Prosperity, Free Press, New York (1995).
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We have to acknowledge that the relationship between the general level of trust in a country and trust in the specific context of an Internet transaction has not yet been firmly established. Survey studies on privacy, an issue very relevant to online transactions, have shown, for example, that even among relatively high trust countries there may be significant differences in privacy concerns. See for example IBM Multi-National Consumer Privacy Survey, IBM Global Services (1999), www.ibm.com/services/files/privacy_survey_oct991.pdf.
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In Reference 8, Yamagishi and Yamagishi argue that this is typical for Japanese firms.
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In Reference 10, Axelrod considers the so-called prisoner's dilemma game; in Reference 11, Selten, Mitzkewitz and Uhlich describe a Cournot oligopoly; and in Reference 12, Keser deals with a public goods game.
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Amazon.com uses a different feedback system. Any time a buyer at Amazon.com makes a purchase the buyer is encouraged to rate the seller's performance (zero to five stars, five stars being the highest) and leave a short comment. The average rating accompanies the seller's name in product listings.
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K. Kalyanam and S. McIntyre, Returns to Reputation in Online Auction Markets, presentation to IBM Consulting Group (2001).
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The design of auctions for online markets is a highly interesting topic that has been addressed by, for example, Roth and Ockenfels26 and Ockenfels and Roth.27 The role of trust in the auction framework is part of our agenda for future research.
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A. E. Roth and A. Ockenfels, "Last-Minute Bidding and the Rules for Ending Second-Price Auctions: Evidence from eBay and Amazon Auctions on the Internet,"American Economic Review92, 1093-1103 (2002).
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The tripling of the amount invested might be considered as gains from trade.
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The Feedback Forum also mitigates the seller's risks with respect to the buyer's payment.
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34
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35
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We use Statistical Package for the Social Science (SPSS), University Information Technology Services, Indiana University, Bloomington, IN; http://www.indiana.edu/~statmath/index.html.
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36
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See for example S. Siegel and N. J. Castellan, Nonparametric Statistics for the Behavioral Sciences, McGraw-Hill, New York (1988).
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The Centre for Interuniversity Research and Analysis on Organizations (CIRANO) is a non-profit corporation for research targeted to helping businesses become more competitive. Its members come from industry, academia, and the government. CIRANO is located in Montreal; http://www.cirano.qc.ca/en/bref.php.
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P. Kollock, "The Production of Trust in Online Markets," inAdvances in Group Processes (Vol. 16), E. J. Lawler, M. Macy, S. Thyne, and H. A. Walker, Editors, JAI Press, Greenwich, CT (1999).
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