IDEAS home Printed from https://ideas.repec.org/a/spr/infosf/v17y2015i1d10.1007_s10796-012-9394-5.html
   My bibliography  Save this article

Lemon complaints: When online auctions go sour

Author

Listed:
  • Judy E. Scott

    (University of Colorado Denver)

  • Dawn G. Gregg

    (University of Colorado Denver)

  • Jae Hoon Choi

    (University of Colorado Denver)

Abstract

“Lemon” complaints reveal that online auction experiences can turn sour. Theory on information asymmetry explains how “lemons” could drive high quality items away from a market leaving a dominance of poor quality goods. In this paper we analyze “lemon” complaints using content analysis and hierarchical logistic regression. In the data collection of 306 complaints from 8 product categories in online auctions, the results show that compared to standard products “lemons” are much more likely if the product category is for functional items, such as computers and consumer electronics; non-standard items with product description complexity, such as collectibles; and fragile items, such as pottery and glassware. Contrary to expectations, clothing and jewelry, representing sensory products, did not have a statistically significant impact on the frequency of “lemons”. Although two seller negative feedback rating measures did predict non-receipt of goods, seller and buyer ratings and experience did not predict “lemons”.

Suggested Citation

  • Judy E. Scott & Dawn G. Gregg & Jae Hoon Choi, 2015. "Lemon complaints: When online auctions go sour," Information Systems Frontiers, Springer, vol. 17(1), pages 177-191, February.
    • Handle: RePEc:spr:infosf:v:17:y:2015:i:1:d:10.1007_s10796-012-9394-5
    DOI: 10.1007/s10796-012-9394-5
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10796-012-9394-5
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s10796-012-9394-5?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Li, Lingfang (Ivy), 2010. "What is the cost of venting? Evidence from eBay," Economics Letters, Elsevier, vol. 108(2), pages 215-218, August.
    2. Paul Resnick & Richard Zeckhauser & John Swanson & Kate Lockwood, 2006. "The value of reputation on eBay: A controlled experiment," Experimental Economics, Springer;Economic Science Association, vol. 9(2), pages 79-101, June.
    3. Stigler, George J., 2011. "Economics of Information," Ekonomicheskaya Politika / Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 5, pages 35-49.
    4. Ryan Mickey, 2010. "The Impact of a Seller's Ebay Reputation on Price," The American Economist, Sage Publications, vol. 55(2), pages 162-169, November.
    5. Girard, Tulay & Dion, Paul, 2010. "Validating the search, experience, and credence product classification framework," Journal of Business Research, Elsevier, vol. 63(9-10), pages 1079-1087, September.
    6. Zhenhui Jiang & Izak Benbasat, 2007. "Research Note---Investigating the Influence of the Functional Mechanisms of Online Product Presentations," Information Systems Research, INFORMS, vol. 18(4), pages 454-470, December.
    7. Gary E. Bolton & Elena Katok & Axel Ockenfels, 2004. "How Effective Are Electronic Reputation Mechanisms? An Experimental Investigation," Management Science, INFORMS, vol. 50(11), pages 1587-1602, November.
    8. Yong Pan, 2011. "Eliminating the cyber 'lemons' problem with the e-reputation in e-commerce market: theoretical model and practice," International Journal of Networking and Virtual Organisations, Inderscience Enterprises Ltd, vol. 8(3/4), pages 182-191.
    9. D. Harrison McKnight & Vivek Choudhury & Charles Kacmar, 2002. "Developing and Validating Trust Measures for e-Commerce: An Integrative Typology," Information Systems Research, INFORMS, vol. 13(3), pages 334-359, September.
    10. Gregory Lewis, 2011. "Asymmetric Information, Adverse Selection and Online Disclosure: The Case of eBay Motors," American Economic Review, American Economic Association, vol. 101(4), pages 1535-1546, June.
    11. Paul A. Pavlou & Angelika Dimoka, 2006. "The Nature and Role of Feedback Text Comments in Online Marketplaces: Implications for Trust Building, Price Premiums, and Seller Differentiation," Information Systems Research, INFORMS, vol. 17(4), pages 392-414, December.
    12. Carl Shapiro, 1982. "Consumer Information, Product Quality, and Seller Reputation," Bell Journal of Economics, The RAND Corporation, vol. 13(1), pages 20-35, Spring.
    13. Chrysanthos Dellarocas, 2006. "How Often Should Reputation Mechanisms Update a Trader's Reputation Profile?," Information Systems Research, INFORMS, vol. 17(3), pages 271-285, September.
    14. Dellarocas, Chrysanthos, 2003. "The Digitization of Word-of-mouth: Promise and Challenges of Online Feedback Mechanisms," Working papers 4296-03, Massachusetts Institute of Technology (MIT), Sloan School of Management.
    15. Chrysanthos Dellarocas, 2003. "The Digitization of Word of Mouth: Promise and Challenges of Online Feedback Mechanisms," Management Science, INFORMS, vol. 49(10), pages 1407-1424, October.
    16. David Lucking‐Reiley & Doug Bryan & Naghi Prasad & Daniel Reeves, 2007. "Pennies From Ebay: The Determinants Of Price In Online Auctions," Journal of Industrial Economics, Wiley Blackwell, vol. 55(2), pages 223-233, June.
    17. Paul A. Pavlou & David Gefen, 2005. "Psychological Contract Violation in Online Marketplaces: Antecedents, Consequences, and Moderating Role," Information Systems Research, INFORMS, vol. 16(4), pages 372-399, December.
    18. Genesove, David, 1993. "Adverse Selection in the Wholesale Used Car Market," Journal of Political Economy, University of Chicago Press, vol. 101(4), pages 644-665, August.
    19. Paul A. Pavlou & David Gefen, 2004. "Building Effective Online Marketplaces with Institution-Based Trust," Information Systems Research, INFORMS, vol. 15(1), pages 37-59, March.
    20. Praveen R. Nayyar, 1990. "Information asymmetries: A source of competitive advantage for diversified service firms," Strategic Management Journal, Wiley Blackwell, vol. 11(7), pages 513-519, November.
    21. Chrysanthos Dellarocas & Charles A. Wood, 2008. "The Sound of Silence in Online Feedback: Estimating Trading Risks in the Presence of Reporting Bias," Management Science, INFORMS, vol. 54(3), pages 460-476, March.
    22. Sanjeev Dewan & Vernon Hsu, 2004. "Adverse Selection In Electronic Markets: Evidence From Online Stamp Auctions," Journal of Industrial Economics, Wiley Blackwell, vol. 52(4), pages 497-516, December.
    23. Nelson, Phillip, 1970. "Information and Consumer Behavior," Journal of Political Economy, University of Chicago Press, vol. 78(2), pages 311-329, March-Apr.
    24. Chrysanthos Dellarocas, 2005. "Reputation Mechanism Design in Online Trading Environments with Pure Moral Hazard," Information Systems Research, INFORMS, vol. 16(2), pages 209-230, June.
    25. 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.
    26. Richard L. Daft & Robert H. Lengel, 1986. "Organizational Information Requirements, Media Richness and Structural Design," Management Science, INFORMS, vol. 32(5), pages 554-571, May.
    27. Michaël Dewally & Louis Ederington, 2006. "Reputation, Certification, Warranties, and Information as Remedies for Seller-Buyer Information Asymmetries: Lessons from the Online Comic Book Market," The Journal of Business, University of Chicago Press, vol. 79(2), pages 693-730, March.
    28. Daniel Houser & John Wooders, 2006. "Reputation in Auctions: Theory, and Evidence from eBay," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 15(2), pages 353-369, June.
    29. Klein, Benjamin & Leffler, Keith B, 1981. "The Role of Market Forces in Assuring Contractual Performance," Journal of Political Economy, University of Chicago Press, vol. 89(4), pages 615-641, August.
    30. John H. Huston & Roger W. Spencer, 2002. "Quality, Uncertainty and the Internet: The Market for Cyber Lemons," The American Economist, Sage Publications, vol. 46(1), pages 50-60, March.
    31. repec:bla:jindec:v:48:y:2000:i:3:p:227-52 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Onur, Ilke & Bruwer, Johan & Lockshin, Larry, 2020. "Reducing information asymmetry in the auctioning of non-perishable experience goods: The case of online wine auctions," Journal of Retailing and Consumer Services, Elsevier, vol. 54(C).
    2. Ram Ramesh & H. Raghav Rao, 2015. "Foreword: Information Systems Frontiers," Information Systems Frontiers, Springer, vol. 17(1), pages 1-2, February.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Paul A. Pavlou & Angelika Dimoka, 2006. "The Nature and Role of Feedback Text Comments in Online Marketplaces: Implications for Trust Building, Price Premiums, and Seller Differentiation," Information Systems Research, INFORMS, vol. 17(4), pages 392-414, December.
    2. Gary Bolton & Ben Greiner & Axel Ockenfels, 2013. "Engineering Trust: Reciprocity in the Production of Reputation Information," Management Science, INFORMS, vol. 59(2), pages 265-285, January.
    3. Belleflamme,Paul & Peitz,Martin, 2015. "Industrial Organization," Cambridge Books, Cambridge University Press, number 9781107687899, January.
    4. José Canals-Cerdá, 2012. "The value of a good reputation online: an application to art auctions," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 36(1), pages 67-85, February.
    5. Jolivet, Grégory & Jullien, Bruno & Postel-Vinay, Fabien, 2016. "Reputation and prices on the e-market: Evidence from a major French platform," International Journal of Industrial Organization, Elsevier, vol. 45(C), pages 59-75.
    6. Emma von Essen & Jonas Karlsson, 2019. "The effect of competition on discrimination in online markets—Anonymity and selection," PLOS ONE, Public Library of Science, vol. 14(8), pages 1-18, August.
    7. Luís Cabral & Lingfang (Ivy) Li, 2015. "A Dollar for Your Thoughts: Feedback-Conditional Rebates on eBay," Management Science, INFORMS, vol. 61(9), pages 2052-2063, September.
    8. Lingfang (Ivy) Li, 2010. "Reputation, Trust, and Rebates: How Online Auction Markets Can Improve Their Feedback Mechanisms," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 19(2), pages 303-331, June.
    9. Yili (Kevin) Hong & Paul A. Pavlou, 2014. "Product Fit Uncertainty in Online Markets: Nature, Effects, and Antecedents," Information Systems Research, INFORMS, vol. 25(2), pages 328-344, June.
    10. Dominik Gutt & Jürgen Neumann & Steffen Zimmermann & Dennis Kundisch & Jianqing Chen, 2018. "Design of Review Systems - A Strategic Instrument to shape Online Review Behavior and Economic Outcomes," Working Papers Dissertations 42, Paderborn University, Faculty of Business Administration and Economics.
    11. Sarah C. Rice, 2012. "Reputation and Uncertainty in Online Markets: An Experimental Study," Information Systems Research, INFORMS, vol. 23(2), pages 436-452, June.
    12. Chen, Yong & Mak, Barry & Li, Zhou, 2013. "Quality deterioration in package tours: The interplay of asymmetric information and reputation," Tourism Management, Elsevier, vol. 38(C), pages 43-54.
    13. Grégory Jolivet & Bruno Jullien & Fabien Postel-Vinay, 2014. "Reputation and Pricing on the e-Market: Evidence from a Major French Platform," SciencePo Working papers Main hal-03460312, HAL.
    14. Mingfeng Lin & Nagpurnanand R. Prabhala & Siva Viswanathan, 2013. "Judging Borrowers by the Company They Keep: Friendship Networks and Information Asymmetry in Online Peer-to-Peer Lending," Management Science, INFORMS, vol. 59(1), pages 17-35, August.
    15. Gesche, Tobias, 2018. "Reference Price Shifts and Customer Antagonism: Evidence from Reviews for Online Auctions," VfS Annual Conference 2018 (Freiburg, Breisgau): Digital Economy 181650, Verein für Socialpolitik / German Economic Association.
    16. Rajković, Borislav & Đurić, Ivan & Zarić, Vlade & Glauben, Thomas, 2021. "Gaining trust in the digital age: The potential of social media for increasing the competitiveness of small and medium enterprises," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 13(4).
    17. Naoki Masuda & Mitsuhiro Nakamura, 2012. "Coevolution of Trustful Buyers and Cooperative Sellers in the Trust Game," PLOS ONE, Public Library of Science, vol. 7(9), pages 1-11, September.
    18. Ian Ayres & Mahzarin Banaji & Christine Jolls, 2015. "Race effects on eBay," RAND Journal of Economics, RAND Corporation, vol. 46(4), pages 891-917, October.
    19. repec:spo:wpmain:info:hdl:2441/4firg7dmo68rdasf15hi85vn53 is not listed on IDEAS
    20. repec:hal:spmain:info:hdl:2441/4firg7dmo68rdasf15hi85vn53 is not listed on IDEAS
    21. Gary E Bolton & Claudia Loebbecke & Axel Ockenfels, 2007. "How Social Reputation Networks Interact with Competition in Anonymous Online Trading: An Experimental Study," Working Paper Series in Economics 32, University of Cologne, Department of Economics.
    22. Lumeau, Marianne & Masclet, David & Penard, Thierry, 2015. "Reputation and social (dis)approval in feedback mechanisms: An experimental study," Journal of Economic Behavior & Organization, Elsevier, vol. 112(C), pages 127-140.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:infosf:v:17:y:2015:i:1:d:10.1007_s10796-012-9394-5. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.