Working Paper: NBER ID: w22616
Authors: Michael Luca
Abstract: Online marketplaces have proliferated over the past decade, creating new markets where none existed. By reducing transaction costs, online marketplaces facilitate transactions that otherwise would not have occurred and enable easier entry of small sellers. One central challenge faced by designers of online marketplaces is how to build enough trust to facilitate transactions between strangers. This paper provides an economist’s toolkit for designing online marketplaces, focusing on trust and reputation mechanisms.
Keywords: No keywords provided
JEL Codes: D47; D8; J15
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Reputation systems (Z13) | Trust (G21) |
| Trust (G21) | Facilitation of transactions (L14) |
| Design choices increasing social distance (C92) | Discrimination (J71) |
| Design choices (C52) | Trust (G21) |
| Design choices (C52) | Discrimination (J71) |
| User reviews (Y30) | Trust (G21) |
| User reviews (Y30) | Quality incentives (J33) |
| Design choices (C52) | Unintended consequences (D62) |