Dealing With Uncertainty: The Value of Reputation in an Institutional Void
Type
working paper
Author(s)
Abstract (De)
We analyse an online black market in which no legal institutions exist to alleviate buyer uncertainty. Traders make use of platform rating systems, thereby providing an observable measure of reputation in an institutional void. We estimate the value of seller rating for unit prices charged by exploiting the sudden market exit of a major platform. We track sellers that were forced to migrate to the competing platform and make use of their ratings ‘reset’. We find that on average an increase of one percentage point in rating results in a unit price increase of 20% of a standard deviation.
Language
English
HSG Classification
contribution to scientific community
HSG Profile Area
SEPS - Economic Policy
Subject(s)
Eprints ID
253964