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Thursday, October 28, 2004

Online Reputation and Trust

Reputation and Trust

In the online world, this is such a fascinating topic. Where so much anonymity can exist, how can a people trust one another and build reputations? What are you trusting…a person, a username, the community, the safety net around the community, etc.?


As these articles include, my experience with online trust and reputation can be summed up using ebay as an example. Risk, trust, reputation, negative feedback, positive feedback, and formal enforcement policies all come into play with ebay. So, what makes me trust enough to make an ebay purchase? My thoughts and actions usually follow a pattern as follows.

First, I locate an item I wish to purchase. I scan over the pictures and descriptions for any obvious signs of reasons to not trust the item or seller. This test of face validity is important to me. Are there spelling mistakes, is the picture good quality, and does the layout of the description (color scheme, animations, repetition in details, external links, general readability) look as if it is attempting to detract from the actual item? Things like this. If I’m uncomfortable with the description, I may move on to the next item, I may contact the seller with some question, hoping to confirm or refute my assumptions. I’ve learned that there is a strong correlation between good face validity in an item description and the reputation of the seller. But I don’t know why. Is it because a certain type of person is trustworthy and able to produce a quality presentation? I doubt it, else why would con artist be so successful. Is it because these flaws in item description really are a representation of the product (and service that accompanies that product); that is, the flaws are little clues that something is wrong with the item and/or seller? I tend to agree with this hypothesis.

If the item description passes the face validity test, then I glance at the feedback record of the seller. If the feedback rating is 100% then I don’t even bother to read the details of the feedback, regardless of how many feedback responses there are. How new a person is to the ebay community has very little bearing on my willingness to purchase an item. If the feedback is less than 100% then I scan through the details, and the number of feedbacks is important. Generally, I look for trends. If a person has many feedback responses and made mistakes early in their ebay experience, but have fixed the problems—say, bad packaging, charging too much on shipping, slow response, or bad communication—then I am very likely to dismiss all of the negative feedbacks. However, if a person has only a few total feedback and/or the negative feedbacks are fairly recent, then I will likely make a judgment call on how severe the negative comments are and if they are things that would bother me (for example, charging too much for shipping does not bother me as long as it’s clearly stated in the product description).

If the feedback is deemed acceptable, then I look to see how many others are bidding on the item. This seems like a strange thing to do, yet it isn’t. By looking at how many others are bidding, I am really looking at how many others trust the current item being sold and the reputation of the seller. It’s a small validation that my impressions are supported by others. An item with fifteen people bidding gives me more encouragement than an item with one person bidding. There have been a few occasions where had other people been bidding on an item, I would have bid also, but since there weren’t I did not bid.

Once all of these items are acceptable, I email the seller with any questions. If the seller does not respond to my questions, I will not bid, regardless of how all the previous trust issues played out. The seller not responding to a question is more powerful than anything else. It speaks to their likelihood of responding should any problem arise. If they do not respond beforehand, why would they respond afterwards?

If my questions are answered or if I did not have any questions, then I go ahead and bid (realize that if there are no questions, this whole trust-building process usually takes less than two minutes). There is one more item that plays into trust in the online/ebay world: internal protections.

The articles are incorrect, perhaps because they are out-dated (in technology terms). There are warranties, guarantees, and a formal enforcement of rules with ebay and other online locations requiring trust and reputation. If it weren’t for these guarantees, I would be much less trusting to carry out any transaction online, regardless of the reputation and my perception of trust of a person. In fact there are several layers of protection for the buyer on ebay. I refer to these as ebay’s safety net. If a buyer purchases an item using a credit card through PayPal, s/he is protected the most. Ebay’s policy is to refund up to $200 if an item does not arrive to the purchaser at all. Paypal’s policy is to refund up to $500 if an item arrives but is not as it was described. And, most credit cards will refund a disputed claim if there is a legitimate reason and if it is within thirty days. I admit that these three protections are in the back of my mind, when I am purchasing an ebay item, just in case something goes wrong with the sale. I have, on a couple occasions, had to take advantage of these protections and they work very well. Frequently the amount I am willing to spend for an item is mandated by the limits on the refund policies of ebay and PayPal.

I’m an inherently trusting person. At the same time, I cannot understand how people like Mark Cuban could spend over $30 million buying a private jet online from a stranger. I am caused to ask: is he more trusting than I, does he have other safety nets in place I do not know about, or is money that available to him that he could risk losing so much of it? I am only willing to spend online what I can afford to lose completely, sort of likely gambling.

So, how does this compare with transactions in the real world, you know the one where interactions occur with real people, usually without computers and the Internet? In the real world, to me, an archived record of trust and reputation is much less important. This is because, as one of the articles stated, capturing and distributing quality feedback is costly. So costly, in fact, that I’m willing to bet that customers never really get accurate feedback records from people and companies with whom they do business. I would also add that gathering and distributing accurate feedback is not as cost beneficial in the real world as it is online. As far as reputation goes, I rely on word of mouth and my own personal experience when purchasing any good or service ahead of relying on a feedback record or archived reputation. This means that a real-world seller must be more preoccupied with current happenings than with long term trends of improvement. In establishing trust, I rely on body language, gut feeling, and speech usage (sarcasm, joking, hesitations, stuttering, etc.) much more in real-world transactions than I could ever possibly do with online transactions. I would also say things like, “Hey, how have your dealings with so and so been recently?”

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