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Fixing Feedback Revision Rules in Online Markets

Author

Listed:
  • Gary Bolton

    (Managerial Economics, Naveen Jindal School of Management, University of Texas at Dallas, Richardson, Texas 75080)

  • Kevin Breuer

    (Department of Economics, University of Cologne, D-50923 Cologne, Germany)

  • Ben Greiner

    (Institute for Markets and Strategy, Vienna University of Economics and Business (WU Vienna), 1020 Vienna, Austria and University of New South Wales, Australia)

  • Axel Ockenfels

    (Department of Economics, University of Cologne, D-50923 Cologne, Germany)

Abstract
Feedback withdrawal mechanisms in online markets aim to facilitate the resolution of conflicts during transactions. Yet, frequently used online feedback withdrawal rules are flawed and may backfire by inviting strategic transaction and feedback behavior. Our laboratory experiment shows how a small change in the design of feedback withdrawal rules, allowing unilateral rather than mutual withdrawal, can both reduce incentives for strategic gaming and improve coordination of expectations. This leads to less trading risk, more cooperation, and higher market efficiency.

Suggested Citation

  • Gary Bolton & Kevin Breuer & Ben Greiner & Axel Ockenfels, 2021. "Fixing Feedback Revision Rules in Online Markets," ECONtribute Discussion Papers Series 070, University of Bonn and University of Cologne, Germany.
    • Handle: RePEc:ajk:ajkdps:070
    as

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    File URL: https://www.econtribute.de/RePEc/ajk/ajkdps/ECONtribute_070_2021.pdf
    File Function: First version, 2021
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    References listed on IDEAS

    as
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    Cited by:

    1. Rense Corten & Judith Kas & Timm Teubner & Martijn Arets, 2023. "The role of contextual and contentual signals for online trust: Evidence from a crowd work experiment," Electronic Markets, Springer;IIM University of St. Gallen, vol. 33(1), pages 1-17, December.

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    More about this item

    Keywords

    dispute resolution system; market design; reputation; trust;
    All these keywords.

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • C9 - Mathematical and Quantitative Methods - - Design of Experiments
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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