Engineering Trust: Reciprocity in the Production of Reputation Information

Authors:
Gary Bolton;Ben Greiner;Axel Ockenfels
Affiliations:
Smeal College of Business, Pennsylvania State University, University Park, Pennsylvania 16802/ and Jindal School of Management, University of Texas at Dallas, Richardson, Texas 75080;School of Economics, University of New South Wales, Sydney NSW 2052, Australia;Department of Economics, University of Cologne, D-50923 Kö/ln, Germany
Venue:
Management Science
Year:
2013

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Abstract

Reciprocity in feedback giving distorts the production and content of reputation information in a market, hampering trust and trade efficiency. Guided by feedback patterns observed on eBay and other platforms, we run laboratory experiments to investigate how reciprocity can be managed by changes in the way feedback information flows through the system, leading to more accurate reputation information, more trust, and more efficient trade. We discuss the implications for theory building and for managing the redesign of market trust systems. This paper was accepted by Teck Ho, decision analysis.