The Value of Reputation on eBay: A Controlled Experiment This paper presents a controlled experiment to assess the impact of seller reputation on auction outcomes on eBay. The study was conducted with an established eBay seller, John Swanson, who sold matched pairs of vintage postcards under his high-reputation identity and under new, low-reputation identities. The results showed that the established identity sold items for 7.6% higher prices than the new identities. This difference was considered reasonable given the risk buyers incurred. Surprisingly, even with one or two negative feedbacks, the new IDs did not experience a significant price drop. The paper discusses the challenges of reputation systems in online markets, where traditional mechanisms of reputation are absent. It highlights the importance of standardization and reputation in facilitating trust and reducing information asymmetry. eBay's reputation system allows users to leave feedback on their transactions, which can influence future buyers' decisions. However, the study found that eBay's reputation system does not always reflect pure rational game-theoretic processes. The paper also reviews previous empirical studies on the effects of eBay's reputation system on sales. These studies have produced inconsistent results, with some suggesting that negative feedback is more important than positive feedback, while others find the effects of reputation on sale price to be minimal. The study also notes that the effects of reputation may vary depending on the type of product, with more expensive, less standardized, or used items being more affected. The paper presents a controlled field experiment to determine how eBay seller reputations work in practice. The experiment involved selling matched pairs of items under different seller identities and analyzing the effects of reputation on auction outcomes. The results showed that the established seller had a higher probability of sale and higher prices than the new sellers. The study also found that negative feedback had a smaller impact on prices than expected, suggesting that buyers may not place as much weight on negative feedback as on positive feedback. The paper concludes that while eBay's reputation system has the potential to reduce information asymmetry and improve auction outcomes, its effectiveness may vary depending on the type of product and the behavior of buyers. The study highlights the importance of controlling for other variables in empirical studies of reputation systems and suggests that further research is needed to fully understand the impact of reputation on online markets.The Value of Reputation on eBay: A Controlled Experiment This paper presents a controlled experiment to assess the impact of seller reputation on auction outcomes on eBay. The study was conducted with an established eBay seller, John Swanson, who sold matched pairs of vintage postcards under his high-reputation identity and under new, low-reputation identities. The results showed that the established identity sold items for 7.6% higher prices than the new identities. This difference was considered reasonable given the risk buyers incurred. Surprisingly, even with one or two negative feedbacks, the new IDs did not experience a significant price drop. The paper discusses the challenges of reputation systems in online markets, where traditional mechanisms of reputation are absent. It highlights the importance of standardization and reputation in facilitating trust and reducing information asymmetry. eBay's reputation system allows users to leave feedback on their transactions, which can influence future buyers' decisions. However, the study found that eBay's reputation system does not always reflect pure rational game-theoretic processes. The paper also reviews previous empirical studies on the effects of eBay's reputation system on sales. These studies have produced inconsistent results, with some suggesting that negative feedback is more important than positive feedback, while others find the effects of reputation on sale price to be minimal. The study also notes that the effects of reputation may vary depending on the type of product, with more expensive, less standardized, or used items being more affected. The paper presents a controlled field experiment to determine how eBay seller reputations work in practice. The experiment involved selling matched pairs of items under different seller identities and analyzing the effects of reputation on auction outcomes. The results showed that the established seller had a higher probability of sale and higher prices than the new sellers. The study also found that negative feedback had a smaller impact on prices than expected, suggesting that buyers may not place as much weight on negative feedback as on positive feedback. The paper concludes that while eBay's reputation system has the potential to reduce information asymmetry and improve auction outcomes, its effectiveness may vary depending on the type of product and the behavior of buyers. The study highlights the importance of controlling for other variables in empirical studies of reputation systems and suggests that further research is needed to fully understand the impact of reputation on online markets.