The Value of Reputation on eBay: A Controlled Experiment Paul Resnick, Richard Zeckhauser, John Swanson, and Kate Lockwood This paper presents a controlled experiment to assess the impact of reputation on eBay sales. The study compares the performance of an established eBay seller with a high reputation to new sellers with little or no reputation. The experiment also examines the effect of negative feedback on sales. The results show that the established seller achieved a 7.6% higher price than new sellers, which is consistent with the risk buyers incur when purchasing from unknown sellers. The study also finds that negative feedback does not significantly affect sales prices, even for new sellers with few positive feedbacks. The paper discusses the role of reputation in online markets, where traditional market mechanisms such as standardization and reputation are less effective. The study highlights the challenges of establishing trust in online transactions and the importance of reputation systems in reducing information asymmetry. The paper also reviews previous empirical studies on eBay's reputation system, which have produced conflicting results regarding the impact of reputation on sales. The study's methodology involves a controlled field experiment, where an established seller sold matched pairs of items under different IDs, some with and without negative feedback. The results show that the established seller's reputation significantly influenced sales prices, while negative feedback had a minimal impact. The study also finds that the effect of reputation varies depending on the type of item being sold, with more expensive and less standardized items being more affected by reputation. The paper concludes that reputation systems are essential in online markets, where traditional market mechanisms are less effective. The study highlights the importance of reputation in reducing information asymmetry and increasing trust between buyers and sellers. The results suggest that reputation systems can be effective in improving sales outcomes, but further research is needed to understand the full impact of reputation on online transactions.The Value of Reputation on eBay: A Controlled Experiment Paul Resnick, Richard Zeckhauser, John Swanson, and Kate Lockwood This paper presents a controlled experiment to assess the impact of reputation on eBay sales. The study compares the performance of an established eBay seller with a high reputation to new sellers with little or no reputation. The experiment also examines the effect of negative feedback on sales. The results show that the established seller achieved a 7.6% higher price than new sellers, which is consistent with the risk buyers incur when purchasing from unknown sellers. The study also finds that negative feedback does not significantly affect sales prices, even for new sellers with few positive feedbacks. The paper discusses the role of reputation in online markets, where traditional market mechanisms such as standardization and reputation are less effective. The study highlights the challenges of establishing trust in online transactions and the importance of reputation systems in reducing information asymmetry. The paper also reviews previous empirical studies on eBay's reputation system, which have produced conflicting results regarding the impact of reputation on sales. The study's methodology involves a controlled field experiment, where an established seller sold matched pairs of items under different IDs, some with and without negative feedback. The results show that the established seller's reputation significantly influenced sales prices, while negative feedback had a minimal impact. The study also finds that the effect of reputation varies depending on the type of item being sold, with more expensive and less standardized items being more affected by reputation. The paper concludes that reputation systems are essential in online markets, where traditional market mechanisms are less effective. The study highlights the importance of reputation in reducing information asymmetry and increasing trust between buyers and sellers. The results suggest that reputation systems can be effective in improving sales outcomes, but further research is needed to understand the full impact of reputation on online transactions.