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THE DYNAMICS OF SELLER REPUTATION: EVIDENCE FROM EBAY *
Author(s) -
CABRAL LUÍS,
HORTAÇSU ALI
Publication year - 2010
Publication title -
the journal of industrial economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.93
H-Index - 77
eISSN - 1467-6451
pISSN - 0022-1821
DOI - 10.1111/j.1467-6451.2010.00405.x
Subject(s) - reputation , construct (python library) , business , dynamics (music) , mechanism (biology) , advertising , reputation system , microeconomics , internet privacy , computer science , psychology , economics , law , political science , physics , pedagogy , programming language , quantum mechanics
We construct a panel of eBay seller histories and examine the importance of eBay's reputation mechanism. We find that, when a seller first receives negative feedback, his weekly sales rate drops from a positive 5% to a negative 8%; subsequent negative feedback ratings arrive 25% more rapidly than the first one and don't have nearly as much impact as the first one. We also find that a seller is more likely to exit the lower his reputation is; and that, just before exiting, sellers receive more negative feedback than their lifetime average.