Abstract
Many online systems for bilateral transactions elicit performance feedback from both transacting partners. Such bilateral feedback giving introduces strategic considerations. We focus on reciprocity in the giving of feedback: how prevalent a strategy of giving feedback is only if feedback is first received from one's trading partner. The overall level of feedback activity clearly depends on the prevalence of the reciprocation strategy: in a market with many reciprocators and few unconditional feedback providers, the equilibrium quantity of feedback can be quite low. We estimate the prevalence of such reciprocation in one market, eBay. Reciprocation cannot be directly distinguished from late feedback that was not conditioned on the partner having provided feedback. We develop a model that distinguishes the two by exploiting information about the timing of feedback provision when the partner does not provide feedback. We find that buyers and sellers on eBay used the “reciprocate only” strategy about 20-23% of the time. We also measure the extent to which the prevalence of these strategies changes with the experience levels of the two parties and with the item price.
©2011 Walter de Gruyter GmbH & Co. KG, Berlin/Boston
