An Empirical Study of Tradera's Reputation System

Abstract: Millions of dollars change hands daily through online auction markets. Online trading communities like eBay and Amazon.com are emerging as increasingly important factors of the economy. Various Reputation systems are important components in such electronic markets. Existing evidence suggests that there are a number of problems with such systems. This paper presents an empirical exploration of reputation systems. Two studies of Tradera’s discussion forums are reported. The result of the first, pilot study suggests that both sellers and buyers are worried about getting a retaliatory negative feedback if they leave a negative feedback for an unsatisfactory transaction from their trading parties. Retaliation from the non-paying bidders seems to be the most severe threat and trouble for sellers. A set of negative feedbacks were then gathered from Tradera and data were manually analyzed in order to verify the results from the preliminary study. The results from the second study confirmed the result of the pilot study. A general evaluation of Tradera’s current reputation system is made based on the results of the second study. This paper aims to make a contribution to the literature on online reputation system by developing a typology of seller complaints about Tradera buyers and providing a tentative definition of retaliatory negative feedback based on the findings of both studies. Proposed solutions to the problems of non-payment and feedback retaliation are also presented.