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FINANCIAL VALUE OF REPUTATION: EVIDENCE FROM THE eBAY AUCTIONS OF GMAIL INVITATIONS *
Author(s) -
LEI QIN
Publication year - 2011
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.1467-6451.2011.00457.x
Subject(s) - common value auction , reputation , unobservable , business , valuation (finance) , homogeneous , product (mathematics) , microeconomics , dimension (graph theory) , value (mathematics) , economics , finance , econometrics , computer science , social science , physics , geometry , mathematics , machine learning , sociology , pure mathematics , thermodynamics
In this article, I utilize a unique collection of auctions on eBay to study the influence of seller reputation on auction outcomes. In a market of homogeneous goods with non‐enforceable contracts, I find that sellers who improve their reputation by one quintile from the lowest, experience a 6.2% higher probability of sale and a 6.1% hike in valuation after adjusting for truncation bias from failed auctions and explicitly controlling for unobservable seller heterogeneity. This study also shows that in addition to a dimension of reputation universal across different product markets, the product‐specific dimension of reputation significantly affects the auction outcomes.