The high cost of a good reputation

Auction site eBay doesn't trust sellers to behave honestly. Bill Thompson isn't surprised.

Unlike some of my friends and family I'm not a heavy user of online auctions, and although I have an account on eBay my reputation as a seller or buyer doesn't really matter that much to me.

At the moment I've got 100% positive feedback but the number of transactions is so small that it doesn't really signify.

However, heavy sellers and those who make a substantial proportion of their income from the site care deeply about the reports they get from other buyers and sellers.

Their concerns about negative feedback are well-grounded: In 2002 Paul Resnick and his colleagues did a proper randomised control experiment to assess the value of an eBay reputation, looking to see how much people would bid for articles from sellers with different scores.

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