Trust, reputation and bidding behaviour in online mystery auctions

We use transactions from a distinctive online environment of 'mystery' auctions to examine the role that trust plays and how it impacts bidding behaviour when the exact characteristics of a good being auctioned are purposefully concealed from buyers. We show that buyers are generally trust...

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Bibliographic Details
Published in:Applied economics letters 2018-06, Vol.25 (10), p.702-706
Main Authors: Chiou, Lesley, Pate, Jennifer
Format: Article
Language:English
Subjects:
Auctions
Behavior
Bidding
E-commerce
Economic analysis
Economic theory
Economics
Electronic commerce
financial markets
gift cards
Markets
Personal selling
reputation
Reputations
Transactions
Trust
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Summary:We use transactions from a distinctive online environment of 'mystery' auctions to examine the role that trust plays and how it impacts bidding behaviour when the exact characteristics of a good being auctioned are purposefully concealed from buyers. We show that buyers are generally trusting seller claims in online transactions and that seller reputation becomes significantly more important to buyers (as demonstrated by their bids) when the quality (or value) of the good is unspecified. Our findings can be extrapolated to consider broader economic implications of bidding behaviour impacted by trust, such as in financial markets, where over-bidding may lead to price bubbles.
ISSN:1350-4851
1466-4291
DOI:10.1080/13504851.2017.1358441