The effects of reputation systems in online marketplaces

Abstract

This dissertation aims to verify the effects of reputation systems in online marketplaces. While there are already a plethora of studies which have examined this research topic (usually using empirical data collected from eBay) and provided meaningful insights, there are several gaps in these studies. (1) The empirical findings on the relationships between seller reputation and auction outcomes in the online auction marketplace are inconsistent or even contradictory. These inconsistent findings may confuse researchers and practitioners regarding the effects of reputation systems. (2) Existing studies have focused on the online auction marketplace, and have overlooked the online retailing marketplace. However, the online retailing marketplace is different from the online auction marketplace, thus the research findings in the online auction marketplace may not be applicable in the online retailing marketplace. (3) The existing literature presumed that consumers and sellers are strangers before transactions, and ignored consumers’ purchase experience. However, accompanied with the prevalence of online marketplaces, consumers may already have purchase experiences with specified sellers before their transactions. Given that consumers already have purchase experiences, the effects of seller reputations on transaction outcomes may be changed. To address these three gaps, this dissertation includes three related sub studies. In study 1, we comprehensively review the existing studies on the effects of seller reputation on transaction outcomes in the online auction marketplace. By a meta-analysis method, we synthesize the research findings, and conclude that reputation systems do have effects on auction outcomes in the online auction marketplace. We also identify and verify several moderators which may influence the effects of seller reputation on auction outcomes. In study 2, we generalize the research findings from the online auction marketplace to the online retailing marketplace. In particular, because the major difference between the online auction marketplace and the online retailing marketplace is the variation of pricing mechanisms, we examine sellers’ pricing strategy in the online retailing marketplace when reputation is given. We conduct an empirical study using data collected from a dominant online retailing marketplace in China. Interestingly, our research results indicate that when goods are search-type goods, high reputation sellers charge a relatively low price. This finding is contradictory to the research finding in the online auction marketplace. In study 3, we verify the effect of seller reputation on a consumer’s repurchase behavior when the consumer already has purchase experience with the specified seller. We adopt a belief update model, and collect actual transaction data to verify the model. The results indicate that the effect of seller reputation on a consumer’s repurchase probability is positively moderated by the ambiguity of the consumer’s purchase experience. When the consumer has confidence in his/her purchase experience, seller reputation has no effect on the consumer’s repurchase probability. We discuss further factors which may influence the effects of reputation systems. By considering reputation systems as a type of IT Artifact, we propose avenues for future research to examine the effects of reputation systems in online marketplaces.

Date of Award	15 Jul 2010
Original language	English
Awarding Institution	City University of Hong Kong
Supervisor	Kwok Kee WEI (Supervisor)