The Value of Reputation on eBay: A Controlled Experiment

Paul Resnick, Richard Zeckhauser, John Swanson, and Kate Lockwood[1]

[1] Resnick and Lockwood, School of Information, University of Michigan; Zeckhauser, Kennedy School, Harvard University; Swanson, Johnninaswanson, eBay, and Mission Viejo, California.

Forthcoming in Experimental Economics.

Initial draft: June 21, 2002, presented at the June 2002 ESA conference, Boston, MA.

Final pre-publication version.

Link to published version. Volume 9, Issue 2, Jun 2006, Page 79-101.


We conducted the first randomized controlled field experiment of an Internet reputation mechanism.  A high-reputation, established eBay dealer sold matched pairs of lots -- batches of vintage postcards -- under his regular identity and under new seller identities (also operated by him). As predicted, the established identity fared better.  The difference in buyers’ willingness-to-pay was 8.1% of the selling price. A subsidiary experiment followed the same format, but compared sales by relatively new sellers with and without negative feedback. Surprisingly, one or two negative feedbacks for our new sellers did not affect buyers’ willingness-to-pay.