The usefulness of bidders' reputation ratings to sellers in online auctions

To complement existing research showing that sellers' reputation ratings in online auctions are extremely useful to most bidders therein, we examine current usefulness of bidders' reputation ratings to sellers and consider how they can be made more useful. In two (briefly described) field studies, we find that even at the boundary conditions, when bidder ratings are extremely atypical and are made conveniently available, they are not used by most sellers. To make bidder reputations more useful, we propose several new measures based on relational marketing theories in consumer settings, which operationalize the relational orientation (via number and extent of multiple-transaction relationships) and the potential of bidders as relational partners (via purchase intensity, average purchase amount, bidding intensity, and bidding caution). These measures, derived from existing bidder reputation profiles, are evaluated for their discriminative value by employing a mixture modeling approach and for their predictive value by tracking a random sample of eBay bidders in a longitudinal year-long field study. We conclude with a discussion of the practical implications of our proposal for sellers, bidders, and online auctioneers.