Blind Trust Online: Experimental Evidence from Baseball Cards

Jin, Ginger Zhe; Kato, Andrew

doi:10.2139/ssrn.365120

Cited by 17 publications

(16 citation statements)

References 17 publications

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“…All these elasticities are consistent with an experience and learning explanation. Our findings are also consistent with Jin and Kato (2004) who find that uninformed bidders are more likely to be misled by non-credible claims of quality and are likely to pay a higher price for items. List and Lucking-Reiley (2002) find that bidders are more likely to bid strategically and in line with principles of economic rationality in high-stakes bidding.…”

Section: Model Estimatessupporting

confidence: 91%

Willingness to Pay and Competition in Online Auctions

Chan

Kadiyali²,

Park³

2007

Journal of Marketing Research

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The authors model how to measure consumer willingness to pay (WTP) from an English or ascending first-price auction based on two general bidding premises: no bidder bids more than her WTP, and no bidder allows a rival bidder to win at a price that she is willing to beat (Haile and Tamer 2003). In other words, a "no regret" rule in bidding is proposed. Other than that, no other restrictive assumptions on maximands or behavior of bidders in a competitive auction context are imposed. WTP is modeled as having two components: a pure product feature component and one based on the auction market environment. The latter includes bidder experience, seller reputation, and measures for competition among bidders and among items. The proposed model is general enough to include "buy it now" (BIN) (equivalent to a posted price) auction mechanism.The authors use data of notebook auctions from one of the largest Internet auction sites in Korea. They find that most product characteristics matter in the expected ways. Other primary findings are as follows: (1) WTP declines as more similar items are concurrently listed with the focal item; there is an additional effect if these similar items also belong to the same brand. Therefore, market thickness matters for consumer WTP. (2) More extensive site-surfing and bidding histories lead to lower WTP, implying that search costs and experience matter in bidding. As specific substantive benefits, the authors demonstrate how sellers can calculate changes in WTP, and hence the expected revenue, as the number of concurrently available similar items varies.Key words: internet auctions, bidder willingness-to-pay, bidder competition, item competition, econometric models.Auctions on the Internet are a booming enterprise. From a managerial perspective, two recent trends are worth noting. First, the Internet auction market appears to have matured enough that managers are beginning to ask whether auction data can be used to estimate consumer valuations for various products. As a recent report indicated, "For years, eBay Inc. has let its users buy and sell almost anything. Now it wants to become the blue book for just about everything … Recently, eBay stepped up the program with two deals that show how the San Jose, Calif., company's data could end up as the basis for guides used to determine fair market prices for items that may never be purchased or sold on the site itself … eBay is making the push at a time with its site has grown monstrously large, with enough auctions of items across various categories that the company says it can provide representative market prices" (Wall Street Journal, December 8, 2003). Second, there is a growing interest in understanding the impact of competition among auction items on bidder behavior. These two managerial concerns form the core research questions of our paper.In measuring consumer valuations from auction data, there are three major issues to be resolved: (1) How to separate out the impact of auction market environment from pure productbased con...

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Section: Model Estimatessupporting

confidence: 91%

Willingness to Pay and Competition in Online Auctions

Chan

Kadiyali²,

Park³

2007

Journal of Marketing Research

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“…To the best of our knowledge, together with Jin and Kato (2004) on baseball card sellers and Jin and Leslie (2004) on L.A. restaurants, ours is one of the first empirical papers to study the relation between seller's reputation and seller's actions. In fact, we believe ours is the first study to look at the lifetime dynamics of sellers' reputation: how a reputation is built and how it is used; how sellers make choices to influence their reputation; and how sellers react to changes in their reputation.…”

Section: Introductionmentioning

confidence: 99%

“…Ba and Pavlou (2002) conduct a laboratory experiment in which subjects are asked to declare their valuations for experimenter generated profiles, and find a positive response to better profiles. Jin and Kato (2004) assess whether the reputation mechanism is able to combat fraud by purchasing ungraded baseball cards with sellerreported grades, and having them evaluated by the official grading agency. They report that while having a better seller reputation is a positive indicator of honesty, reputation premia or discounts in the market do not fully compensate for expected losses due to seller dishonesty.…”

Section: Introductionmentioning

confidence: 99%

THE DYNAMICS OF SELLER REPUTATION: EVIDENCE FROM EBAY^*

Cabral

Hortaçsu

2010

The J Industrial Economics

470

242

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We construct a panel of eBay seller histories and examine the importance of eBay's reputation mechanism. We find that, when a seller first receives negative feedback, his weekly sales rate drops from a positive 7% to a negative 7%; subsequent negative feedback ratings arrive 25% more rapidly than the first one and don't have nearly as much impact as the first one. We also find that a seller is more likely to exit the lower his reputation is; and that, just before exiting, sellers receive more negative feedback than their lifetime average.We consider a series of theoretical models and measure them against these empirical results. Regardless of which theoretical model best explains the data, an important conclusion of our paper is that eBay's reputation system gives way to noticeable strategic responses from both buyers and sellers.

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“…Taken from http://pages.ebay.com/help/feedback/questions/mutualwithdrawal.html (September 2006). 19 Jin and Kato (2002) find in a field experiment that "at least some buyers" overestimate the informational content of feedback score and "drastically underestimate the risk of trading online." Likewise, Resnick, Zeckhauser, Swanson, and Lockwood (2004) question whether price premia, which they find, reflect a reputation equilibrium, and should in fact not be observed in the data.…”

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confidence: 99%

The actual structure of eBay's feedback mechanism and early evidence on the effects of recent changes

Klein¹,

Lambertz²,

Spagnolo³

et al. 2009

IJEB

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AbstracteBay's feedback mechanism is considered crucial to establishing and maintaining trust on the world's largest trading platform. The effects of a user's reputation on the probability of sale and on prices are at the center of a large number of studies. More recent theoretical work considers aspects of the mechanism itself. Yet, there is confusion amongst users about its exact institutional details, which also changed substantially in the last few months. An understanding of these details, and how the mechanism is perceived by users, is crucial for any assessment of the system. We provide a thorough description of the institutional setup of eBay's feedback mechanism, including recent changes to it. Most importantly, buyers now have the possibility to leave additional, anonymous ratings on sellers on four different criteria. We discuss the implications of these changes and provide first descriptive evidence on their impact on rating behavior. JEL Classification: D44, L15, L86.

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Blind Trust Online: Experimental Evidence from Baseball Cards

Cited by 17 publications

References 17 publications

Willingness to Pay and Competition in Online Auctions

Willingness to Pay and Competition in Online Auctions

THE DYNAMICS OF SELLER REPUTATION: EVIDENCE FROM EBAY^*

The actual structure of eBay's feedback mechanism and early evidence on the effects of recent changes

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About

Blind Trust Online: Experimental Evidence from Baseball Cards

Cited by 17 publications

References 17 publications

Willingness to Pay and Competition in Online Auctions

Willingness to Pay and Competition in Online Auctions

THE DYNAMICS OF SELLER REPUTATION: EVIDENCE FROM EBAY*

The actual structure of eBay's feedback mechanism and early evidence on the effects of recent changes

Contact Info

Product

Resources

About

THE DYNAMICS OF SELLER REPUTATION: EVIDENCE FROM EBAY^*