DP5693 Last Minute Feedback
|Author(s):||Tobias Klein, Christian Lambertz, Giancarlo Spagnolo, Konrad O Stahl|
|Publication Date:||June 2006|
|Keyword(s):||eBay, fear of retaliation, informational content, reciprocity, reputation mechanism, strategic feedback behaviour|
|JEL(s):||D44, L15, L86|
|Programme Areas:||Industrial Organization|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=5693|
Feedback mechanisms that allow partners to rate each other after a transaction are considered crucial for the success of anonymous internet trading platforms. We document an asymmetry in the feedback behaviour on eBay, propose an explanation based on the micro structure of the feedback mechanism and the time when feedbacks are given, and support this explanation by findings from a large data set. Our analysis implies that the informational content of feedback records is likely to below. The reason for this is that agents appear to leave feedbacks strategically. Negative feedbacks are given late, in the "last minute", or not given at all, because of the fear of retaliative negative feedback. Conversely, positive feedbacks are given early in order to encourage reciprocation. Towards refining our insights into the observed pattern, we look separately at buyers and sellers, and relate the magnitude of the effects to the trading partners' experience.