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date: 12 August 2020

Abstract and Keywords

Potentially, reputation systems in online markets are ways of safeguarding hazardous single-shot transactions between traders, by artificially creating a network of connections between all users of an online marketplace. Given that online markets exist and use such reputation systems, this has triggered the question how large the value of reputation is. This question has been analyzed in previous research with mixed results. After introducing the issue in some more detail, the chapter posits two arguments that may put research into the value of reputation in a somewhat different light: (1) the fact that the most often used “hedonic regression” method, which considers actual sales only, does not lead to estimates that can be straightforwardly connected to the value of reputation, neither for the seller nor for the buyer, and (2) the empirical evidence from the experimental literature on the effects of semantic feedback, which suggests effect sizes that may well be an order of magnitude larger than the effects found in reputation research. The chapter concludes with some implications for research in the field.

Keywords: trust, reputation, trust reparation, apology, denial, online interaction, reputation systems, feedback

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