Tapan Khopkar, Xin Li, Paul Resnick
Camera-ready prepublicaiton version (PDF format). This is the author's version of the work. It is posted here by permission of ACM for your personal use. Not for redistribution. The definitive version will be published in the proceedings of ACM EC05 Conference on Electronic Commerce, pp. 223-231.
Analysis of usage history for a large panel of eBay sellers suggests that both seller and buyer behavior change in response to changes in a seller’s feedback profile. Sellers are more likely to stop listing items right after receiving a negative feedback. Sellers who continue listing do not seem to improve their performance in order to salvage their reputations. Instead, sellers get more negative feedback after receiving a negative feedback. One reason is that observed negative feedback appears to be symptomatic of a temporary decline in the seller’s quality, which is also reflected in other transactions around the same time. Receipt of negative feedback might also cause a decline in seller quality, but we find only weak evidence of that. Empirical evidence does support a second hypothesis, that buyers appear to be more willing to give negative feedback to sellers who have recently received other negative feedback.