When and Why Do Buyers Rate in Online Markets?

60 Pages Posted: 15 Feb 2022

See all articles by Xiang Hui

Xiang Hui

Washington University in St. Louis

Tobias J. Klein

Tilburg University

Konrad O. Stahl

University of Mannheim - Department of Economics; Centre for Economic Policy Research (CEPR)

Multiple version iconThere are 2 versions of this paper

Date Written: 2022

Abstract

Online ratings play an important role in many markets. We study the often disputed information content of these ratings, by proposing a reduced-form Bayesian model of the typical buyer’s rating decision. Our empirical evidence based on eBay raw data is in line with even intricate predictions from it. We thus have good reasons to calibrate the model to moments of the data. Our simulations suggest that the rating record reveals the seller’s type after about 100 transactions, or 65-70 ratings.

Keywords: online markets, rating, reputation

JEL Classification: D830, L120, L130, L810

Suggested Citation

Hui, Xiang and Klein, Tobias J. and Stahl, Konrad O., When and Why Do Buyers Rate in Online Markets? (2022). CESifo Working Paper No. 9562, Available at SSRN: https://ssrn.com/abstract=4033599 or http://dx.doi.org/10.2139/ssrn.4033599

Xiang Hui (Contact Author)

Washington University in St. Louis ( email )

Tobias J. Klein

Tilburg University ( email )

P.O. Box 90153
Tilburg, DC Noord-Brabant 5000 LE
Netherlands

Konrad O. Stahl

University of Mannheim - Department of Economics ( email )

D-68131 Mannheim
Germany
+49 621 181 1875 (Phone)
+49 621 181 1874 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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