Anonymous markets , adverse selection , moral hazard , reputation building
Abstract:
We study the effects of improvements in eBay’s rating mechanism on seller exit and continuing
sellers’ behavior. Following a large sample of sellers over time, we exploit the fact
that the rating mechanism was changed to reduce strategic bias in buyer rating. That improvement
did not lead to increased exit of poorly rated sellers. Yet, buyer valuation of the
staying sellers—especially the poorly rated ones—improved significantly. By our preferred
interpretation, the latter effect results from increased seller effort; also, when sellers have the
choice between exiting (a reduction in adverse selection) and improved behavior (a reduction
in moral hazard), then they prefer the latter because of lower cost.
Das Dokument wird vom Publikationsserver der Universitätsbibliothek Mannheim bereitgestellt.
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