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Universität zu Köln
Wirtschafts- und Sozialwissenschaftliche Fakultät

Staatswissenschaftliches Seminar - Prof. Schmitz

Inflated reputations: Uncertainty, leniency & moral wiggle room in trader feedback systems

Gary E. Bolton, David J. Kusterer, and Johannes Mans

Abstract. Reputation systems associated with Internet markets are known to be subject to strategic manipulation. The experiment we present suggests that this manipulation can extend to factors that have heretofore been overlooked: the leniency and moral wiggle room that arise from uncertainty about the source of transaction problems. Uncertainty about seller culpability leads to behaviors that reduce the informativeness of the feedback system, thereby diminishing the incentives for honest seller behavior. Under uncertainty, buyers pay about the same prices but get significantly less.

The paper is available for download.