Established eBay sellers get higher prices for good reputations

Jul 07, 2006

EBay sellers with established reputations can expect about 8 percent more revenue than new sellers marketing the same goods, a new University of Michigan study shows.

"People with good reputations are rewarded and people with no reputations are not trusted as well as people who have established reputations," said Paul Resnick, professor in the U-M School of Information and the study's principal author.

The study is the first known randomized controlled look at the value of eBay reputations in the natural setting of actual eBay auctions. The findings showed that eBay's feedback system---the cornerstone of the online auction site---works as it should, by rewarding sellers who have more positive feedback.

The study, "The Value of Reputation on eBay: A Controlled Experiment," is available online in the journal Experimental Economics. It was co-written by Resnick, Richard Zeckhauser of Harvard University, graduate student Kate Lockwood and eBay seller John Swanson.

Surprisingly, the researchers found that one or two negative feedbacks did not hurt new sellers, but it remains unclear why buyers are willing to cut new sellers with negative feedback a little slack.

They offer several explanations, but Resnick said it's likely that buyers are leery of new sellers no matter what the feedback.

"Either way, they aren't trusted," he said.

Resnick added that when researchers conducted the study in 2003, eBay did not show the percentage of negative feedback so it was not obvious whether a relatively new seller had any negative feedback.

The group enlisted the help of an established eBay vendor to sell vintage post cards. The seller set up several new accounts and listed the matching items on all the accounts on alternate weeks. They eventually added negative feedback to some of the new accounts.

There is still much to be learned about the value of feedback on eBay and other online auction sites, Resnick said. His group is currently trying to estimate how frequently buyers and sellers reciprocate the positive feedback they get from one another versus just independently rating the transactions. In this way, researchers will understand what the feedback really means and how informative it is overall.

In earlier work, the group discovered that negative feedback on eBay comes in clumps, and that is partly a result of "stoning," where buyers are more apt to throw stones once they see one negative feedback. The results did not show that sellers changed their behavior after receiving negative feedback.

Source: University of Michigan

Explore further: Color and texture matter most when it comes to tomatoes

add to favorites email to friend print save as pdf

Related Stories

Honor among (credit card) thieves?

Apr 22, 2013

A Michigan State University criminologist dug into the seamy underbelly of online credit card theft and uncovered a surprisingly sophisticated network of crooks that is unique in the cybercrime domain.

Recommended for you

Color and texture matter most when it comes to tomatoes

8 hours ago

A new study in the Journal of Food Science, published by the Institute of Food Technologists (IFT), evaluated consumers' choice in fresh tomato selection and revealed which characteristics make the red fruit most appealing.

How the lotus got its own administration

11 hours ago

Actually the lotus is a very ordinary plant. Nevertheless, during the Qing dynasty (1644-1911) a complex bureaucratic structure was built up around this plant. The lotus was part of the Imperial Household, ...

What labels on textiles can tell us about society

12 hours ago

Throughout Chinese history, dynastic states used labels on textiles to spread information on the maker, the commissioner, the owner or the date and site of production. Silks produced in state-owned manufacture ...

US company sells out of Ebola toys

Oct 17, 2014

They might look tasteless, but satisfied customers dub them cute and adorable. Ebola-themed toys have proved such a hit that one US-based company has sold out.

User comments : 0