The roles of players and reputation: Evidence from eBay online auctions

The uncertainty about product quality and the traders' credibility may impede the liquidity and efficiency of online auctions. In contrast to the literature on online feedback mechanisms that evaluate sellers' reputation without distinguishing their roles in the transactions, we claim that “not all reputation is created equal” — bidders in online auctions assess sellers' reputation based on their feedback history gained from sales solely. This paper explores the impact of the consumers' above behavior on the reputation system with an analytical model and empirical evidence from a popular online auction website eBay.