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Buyer feedback as a filtering mechanism for reputable sellers

Author

Listed:
  • Laureti, Paolo
  • Slanina, František
  • Yu, Yi-Kuo
  • Zhang, Yi-Cheng

Abstract

We propose a continuum model for the description of buyer and seller dynamics in an Internet market. The relevant variables are the research effort of buyers and the sellers’ reputation building process. We show that, if a commercial website gives consumers the possibility to rate credibly sellers they bargained with, vendors are forced to be more honest. This leads to mutual beneficial symbiosis between buyers and sellers; the overall enhanced volume of transactions contributes ultimately to the website, which facilitates the matchmaking service.

Suggested Citation

  • Laureti, Paolo & Slanina, František & Yu, Yi-Kuo & Zhang, Yi-Cheng, 2002. "Buyer feedback as a filtering mechanism for reputable sellers," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 316(1), pages 413-429.
    • Handle: RePEc:eee:phsmap:v:316:y:2002:i:1:p:413-429
    DOI: 10.1016/S0378-4371(02)01215-3
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    References listed on IDEAS

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    1. George A. Akerlof, 1970. "The Market for "Lemons": Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 84(3), pages 488-500.
    2. Zhang, Yi-Cheng, 2001. "Happier world with more information," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 299(1), pages 104-120.
    3. Joseph E. Stiglitz, 2000. "The Contributions of the Economics of Information to Twentieth Century Economics," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 115(4), pages 1441-1478.
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    Cited by:

    1. Gabuthy, Yannick & Jacquemet, Nicolas & Marchand, Nadège, 2008. "Does resorting to online dispute resolution promote agreements? Experimental evidence," European Economic Review, Elsevier, vol. 52(2), pages 259-282, February.
    2. Laureti, Paolo & Moret, Lionel & Zhang, Yi-Cheng, 2005. "Aggregating partial, local evaluations to achieve global ranking," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 345(3), pages 705-712.
    3. Gabuthy, Yannick & Jacquemet, Nicolas & Marchand, Nadège, 2008. "Does resorting to online dispute resolution promote agreements? Experimental evidence," European Economic Review, Elsevier, vol. 52(2), pages 259-282, February.

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