Fixing Feedback Revision Rules in Online Markets

Gary Bolton (), Kevin Breuer (), Ben Greiner and Axel Ockenfels
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Kevin Breuer: Department of Economics, University of Cologne, D-50923 Cologne, Germany

No 70, ECONtribute Discussion Papers Series from University of Bonn and University of Cologne, Germany

Abstract: Feedback withdrawal mechanisms in online markets aim to facilitate the resolution of conflicts during transactions. Yet, frequently used online feedback withdrawal rules are flawed and may backfire by inviting strategic transaction and feedback behavior. Our laboratory experiment shows how a small change in the design of feedback withdrawal rules, allowing unilateral rather than mutual withdrawal, can both reduce incentives for strategic gaming and improve coordination of expectations. This leads to less trading risk, more cooperation, and higher market efficiency.

Keywords: dispute resolution system; market design; reputation; trust (search for similar items in EconPapers)
JEL-codes: C73 C9 D02 L14 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2021-03
New Economics Papers: this item is included in nep-exp
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https://www.econtribute.de/RePEc/ajk/ajkdps/ECONtribute_070_2021.pdf First version, 2021 (application/pdf)

Related works:
Journal Article: Fixing feedback revision rules in online markets (2023)
Working Paper: Fixing feedback revision rules in online markets (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:ajk:ajkdps:070

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