Study: Altruism and reciprocity in online transactions
Researchers have looked at why anonymous traders using eBay auction sites bother to give feedback on one another, given such transactions are usually one-offs.
The study – published in the journal American Sociological Review – reveals that altruism and reciprocity are key parts of our human behaviour, which is why we want to let others know when we meet a bad or good trader online, and reward or punish behaviour depending on how we have been treated ourselves.
Researchers from the University of Oxford, ETH Zurich and the University of Bern examined data from the German eBay auction site from the Christmas period between 1 December 2004 and 7 January 2005. The sample of 14,000 transactions was for used or new mobile phones, while another 300,000 transactions involved the sale of DVDs.
They analysed the ratings provided by both the buyer and the seller in the 90-day period after a successful sale. This online feedback was simply classed as 'positive', 'negative' or 'neutral'.
The study estimated that online business was repeated between the same seller and buyer in only 5% of interactions, so most individuals giving feedback were unlikely to receive any direct benefit themselves.
The study finds evidence that shoppers have altruistic motives for this behaviour: those who had good experiences with a trader were more likely to give positive feedback if that seller had fewer existing ratings. The researchers explain that this suggests such shoppers want to boost the reputations of good sellers who are relatively unknown. They also believe that online shoppers to some extent want to contribute to the common good, which is what the online reputation system provides.
As the number of positive ratings went up, so did the seller's reputation, leading to higher sales and selling prices, while negative ratings drove sales and prices down. The study argues that this type of feedback allows anonymous online markets to function fairly as without it, the unscrupulous would try to take advantage, leading to a likely collapse of the online auction system.
Although the study says that the data shows altruism and reciprocity in the behaviour of online shoppers, the researchers believe that strategic motives could also be at work (although this is difficult to identify from the data). Until May 2008, eBay Germany had a system in which both the buyer and the seller could leave feedback within 90 days. The study says this led to an inflation of positive evaluations, with the researchers suggesting that sellers could have tried to elicit good responses by saying positive things to the buyers first. They also suggest that buyers may have refrained from complaining about some sellers because it might expose them to retaliatory negative comments.
The study mentions that eBay's reputation system was amended in 2008 and, since then, the system has not permitted sellers to give negative ratings or learn who rated them.
Researcher Dr Wojtek Przepiorka, from the Department of Sociology at the University of Oxford, said: 'A selfish person would not bother to spend their time giving this sort of feedback. After all, what is in it for them as an individual?
'However, as a society we have a lot to gain from this apparent concern for the common good. Through analysing the online data, we can track the actions of thousands of shoppers and we see a sense of moral justice and altruism driving their behaviour.
'This data sheds light on how online markets can be designed to work successfully, and also suggests that the same sentiments underlie our human behaviour in the offline world too.'
Co-author Dr Andreas Diekmann from ETH Zurich said: 'This study suggests that online markets using this peer-to-peer model should take into account the altruism and reciprocity found in human behaviour.
'There is a high level of cooperation among anonymous traders in online markets. Indeed, altruistic motives sometimes seem to trump financial ones, as other research has shown that altruistic traders could be deterred from participating in feedback sessions when money is used as an incentive.'