Do Reputation Feedback Systems really improve Trust among Anonymous Traders? An experimental study

Feedback systems are claimed to be a crucial component of the success of electronic marketplaces like eBay or Amazon Marketplace. This article aims to examine the efficiency of various feedback systems on trust between anonymous traders, through a set of experiments based on the trust game. Our results indicate that trust is significantly improved by the introduction of a reputation feedback system. However such mechanisms are far from being perfect and are especially vulnerable to strategic ratings and reciprocation. Our findings indicate that some changes in rating rules may significantly improve the efficiency of feedback systems, by avoiding strategic rating or reciprocation, and hence stimulate trust and trustworthiness among traders. In particular, a system in which individuals are not informed of the other trader’s decision before taking their own decision provides better results both in terms of trust and earnings.