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Non‐Neutral and Asymmetric Effects of Neutral Ratings: Evidence From eBay

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  • Faisal Rabby
  • Quazi Shahriar

Abstract

Seller ratings help overcome adverse selection problems in online transactions between strangers. Using eBay data, we find that auction outcomes are sensitive toward not only positive and negative seller ratings but also neutral ratings. We find that (1) buyers utilize neutral ratings to sort among otherwise identical sellers and value their products and (2) contrary to eBay's opinion, depending on whether a seller is top‐notch or not, neutral ratings can be detrimental or beneficial; for sellers with higher proportions of positive ratings, an increase in neutral ratings decreases sales. For sellers with higher proportion of negative ratings, an increase in neutral ratings increases both sales and revenue. Copyright © 2014 John Wiley & Sons, Ltd.

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  • Faisal Rabby & Quazi Shahriar, 2016. "Non‐Neutral and Asymmetric Effects of Neutral Ratings: Evidence From eBay," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 37(2), pages 95-105, March.
    • Handle: RePEc:wly:mgtdec:v:37:y:2016:i:2:p:95-105
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    1. Jannett Highfill & Kevin M. O’Brien, 2018. "eBay Memorabilia Auctions vis-à -vis Predictions for the 2016 U.S. Presidential Election," The American Economist, Sage Publications, vol. 63(1), pages 71-78, March.

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