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 dot life Monday, 13 January, 2003, 15:23 GMT
The value of a good name
Ebay auction website

On online auction sites such as eBay, a good reputation can not only attract buyers, it can help boost the asking price.
Part of the attraction of the net is that it can insulate users from some of the consequences of their actions.

If many people eavesdropped as shamelessly in real life as they do in chatrooms, for instance, they would rapidly earn themselves a rebuke or a punch on the nose. Similarly many have had flaming rows via e-mail that face-to-face might lead to a divorce, early retirement or a punch on the nose.

But there are places on the net where your actions, both online and off, can have serious repercussions.

Tom Cruise signs Jay Leno's Harley-Davidson for an e-bay auction
Harley-Davidson for sale, one careful owner
One such is the auction site eBay.

The site encourages buyers to rate the service they receive from sellers and provides a handy summary of the reliability and honesty of those offering stuff for sale.

It also allows people to leave comments to flesh out the basic rating and many people are known to browse the reputation records and, if possible, buy from those who offer better service.

Thus researchers Paul Resnick and Kate Lockwood, from the University of Michigan, and Richard Zeckhauser of Harvard University have investigated just how much a good reputation is worth.

Price hike

The researchers set up an investigation comparing the prices an established eBay seller of vintage postcards can charge with that of a new, untested seller offering similar items.

Bill Clinton online
"Hmmm, a Hog - wonder if this Leno guy is a good bet?"
The established seller, who trades under the Johnninaswanson identity, was rated highly by buyers because he had rarely let anyone down.

After selling similar batches of vintage postcards, worth on average $15, through both the Johnninaswanson and a novice account, the researchers worked out the mark-up a good reputation can command - on eBay, a stainless character record is worth 7.5% more.

"The amount of the premium for a good reputation seemed about right, given the amount of risk that buyers seem to face," Professor Resnick says.

"Since few transactions seem to turn out badly, even when buying from sellers without an established reputation, buyers should only be willing to pay a little more to established sellers."

While eBay's system works for honest brokers, it is not perfect.

"What was more surprising to me was that buyers did not punish novice sellers who received a negative comment," Professor Resnick says.

This could be because buyers only look at reputation summaries rather than the details, but it was not entirely clear why bad behaviour went unpunished.

Rip off

Certainly there are some crooks who take advantage of the loopholes in such a system.

In November, Teresa Smith admitted in a Washington court that she had ripped off more than 300 customers via eBay by taking money for computers that were never delivered.

Cop with dodgy credit card
Credit card fraud is on the increase
But eBay claims that such cases are rare and account for just one in 10,000 of the auctions on its sites. But given that it has more than 24 million active users trading goods worth on average $511, that could add up to a lot of problems.

But it is not just on sites such as eBay that reputation is worth something.

Identity theft, in which thieves try to pass themselves off as someone else, is rife and only works because most shoppers are reputable types whose credit card details do not set off alarm bells for retailers.

Reputation and personal history is also starting to matter on sites such as Amazon, which recommends new items to regular users based on their previous purchases.

Often these recommendations are bent out of shape by the goods bought for friends and relatives on birthdays or at Christmas. But with a few clicks, the customer can remove one-off purchases which skew the system.

But as reputation and online history becomes more a part of using the web, net users could soon be spending more and more time convincing the online world that they are indeed trustworthy.


Every Monday Dot.life looks at how technology has changed our lives, and more importantly how we would like to change our lives. Let us know your views, using the form below.

I've had numerous deals on eBay. When it goes wrong report it INSTANTLY and e-mail the seller that they have 48-72 hrs to respond. If that fails, file a federal fraud claim against the seller, eBay will help with this. You may lose but it stops a lot of others doing the same, which is what the feedback is about.
John, UK

In the example given, just $15 was involved so a buyer might take a chance on a novice seller. The findings might be different if the sums were higher. I have bought computers and other high-value items on eBay, and I always check the seller's feedback. I will not bid if there is anything I feel unhappy about. I suspect that novice sellers of high-value items might suffer a higher penalty than 7.5%, and indeed may not see that item sell at all.
Tom, UK

What's wrong with cash? I bought a guitar amp - 500 worth - for which I was the highest bidder but it was on the basis that I got to inspect & test the item before paying for it. Despite a 2 hour drive, it was exactly as desribed & I bought it. The seller carried the risk - the risk that I wouldn't turn up at all & he'd have to start his auction again.
Dave, UK

I was once locked in a lengthy dispute with a fraudulent seller, to whom I lost 50. The dispute lasted much longer than the option to leave feedback on eBay does. Since I didn't want to leave negative feedback while the argument was ongoing, for fear of making it worse, by the time everything was settled (not to my satisfaction) it was too late and the rip-off seller went unpunished. This seller's feedback record was generally positive, so I had no forewarning.
Joe, UK

I have had the same problem, but instead lost 200. My advice to anyone, no matter how reputable the site may be, is if something sounds too good to be true in an auction, it is!
Jan

I have extensively bought hard-to-find/obsolete items in the past year from eBay. I've found a lot of genuine sellers only too keen to keep up the positive feedback they've built up. All in all I embark on transactions in the knowledge that the more positive feedback accrued (from both buyer and seller alike) generally leads to more credibility in doing the deal.
Murray de Schot, The Netherlands/ex-Scotland

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