EVIDENCE OF THE EFFECT OF TRUST BUILDING TECHNOLOGY IN ELECTRONIC MARKETS: PRICE PREMIUMS AND BUYER BEHAVIOR.

Author List: Ba, Sulin; Pavlou, Paul A.;
MIS Quarterly, 2002, Volume 26, Issue 3, Page 243-268.
Despite the wide use of reputational mechanisms such as eBay's Feedback Forum to promote trust, empirical studies have shown conflicting results as to whether online feedback mechanisms induce trust and lead to higher auction prices. This study examines the extent to which trust can be induced by proper feedback mechanisms in electronic markets, and how some risk factors play a role in trust formation. Drawing from economic, sociological, and marketing theories and using data from both an online experiment and an online auction market, we demonstrate that appropriate feedback mechanisms can induce calculus-based credibility trust without repeated interactions between two transacting parties. Trust can mitigate information asymmetry by reducing transaction-specific risks, therefore generating price premiums for reputable sellers. In addition, the research also examines the role that trust plays in mitigating the risks inherent in transactions that involve very expensive products.
Keywords: Credibility; Electronic Markets; Feedback mechanisms; Information Asymmetry; online risks; Price premiums; Reputation; Language of Keywords: English; French
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List of Topics

#202 0.223 online uncertainty reputation sellers buyers seller marketplaces markets marketplace buyer price signaling auctions market premiums ebay transaction reverse literature comments
#172 0.195 trust trusting study online perceived beliefs e-commerce intention trustworthiness relationships benevolence initial importance trust-building examines discussed building future context transactions
#208 0.189 feedback mechanisms mechanism ratings efficiency role effective study economic design potential economics discuss profile recent component granularity turn compared using
#209 0.116 results study research information studies relationship size variables previous variable examining dependent increases empirical variance accounting independent demonstrate important addition
#264 0.080 risk risks management associated managing financial appropriate losses expected future literature reduce loss approach alternative mitigate failures failure cause mitigation
#199 0.078 reviews product online review products wom consumers consumer ratings sales word-of-mouth impact reviewers word using effect marketing helpfulness electronic commerce