Reputation, Reputation System and Reputation Distribution - An Exploratory Study in Online Consumer-to-Consumer Auctions

Abstract

Reputation is an important organization asset, particularly in the era of e-commerce. In an online consumer-to-consumer (C2C) auction market, a trader’s reputation sends an important signal to his/her trading partners in their decision-making on C2C transactions, due to the nature of the anonymous transaction process. While prior research has shown that reputation systems, such as eBay’s Feedback Forum, facilitated buyer-seller transactions, several fundamental issues with the transaction mechanism remained unclear. Based on the empirical reputation data directly collected from eBay.com, we find that the distribution of reputation scores can be approximated in a geometric function. We analyze the formation of the distribution with a stochastic process model. The computer simulation using the Monte Carlo approach further validates the findings of the empirical study.