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The Value of Bad Ratings: An Experiment on the Impact of Distortions in Reputation Systems

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  • Claudia Keser
  • Maximilian Späth

Abstract

We study the robustness of reputation management systems against distortions in rating behavior. In a laboratory trust experiment with reputation management, we mimic a positive bias by exclusively offering the option to rate positively or to give no rating. As predicted by theoretical considerations, this bias leads to significantly less trust than a system that additionally offers a negative rating option. A system relying solely on negative ratings does not have such an adverse effect. This highlights the importance of negative ratings for the effectiveness of reputation systems.

Suggested Citation

  • Claudia Keser & Maximilian Späth, 2020. "The Value of Bad Ratings: An Experiment on the Impact of Distortions in Reputation Systems," CIRANO Working Papers 2020s-22, CIRANO.
    • Handle: RePEc:cir:cirwor:2020s-22
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    File URL: https://cirano.qc.ca/files/publications/2020s-22.pdf
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    References listed on IDEAS

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    1. Solimine, Philip & Isaac, R. Mark, 2023. "Reputation and market structure in experimental platforms," Journal of Economic Behavior & Organization, Elsevier, vol. 205(C), pages 528-559.

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    More about this item

    Keywords

    Trust; Trustworthiness; Reputation System; Experiment;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games

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