Three experiments examined the role of reputation for alleviating the lemons problem in an online market, and produced the following findings. First, information asymmetry drives the experimental market into a lemons market. Second, reputation about other traders moderately alleviates the lemons problem. Third, the power of reputation as a solution to the problem of lemons is substantially redu...

Financial market prediction on the basis of online sentiment tracking has drawn a lot of attention recently. However, most results in this emerging domain rely on a unique, particular combination of data sets and sentiment tracking tools. This makes it difficult to disambiguate measurement and instrument effects from factors that are actually involved in the apparent relation between online sen...

Platforms can obtain sizable returns by operationally managing their market thickness, i.e., the availability of supply-side inventory. Using data from a natural experiment on a major B2B auction platform specializing in the $424 billion secondary market for liquidating retail merchandise, we find that thickening the platform’s market by consolidating the ending times of auctions to certain wee...

The efficient functioning of markets and institutions assumes a certain degree of honesty from participants. In labor markets, for instance, employers benefit from employees who will render meaningful work, and employees benefit from employers who will pay the promised amount for services rendered. We use an established method for detecting dishonest behavior in a series of experiments conducte...

Online Communities have been researched for a long time from social, informational as well as economic perspectives. Most approaches up-to-now focussed on the interaction of a number of users with specific communities, are studies about the characteristics of communities in different domains or are general guidelines for the development of these communities. These approaches, however, neglect t...

We consider the design of strategies for market making in an exchange. A market maker generally seeks to profit from the difference between the buy and sell price of an asset, yet the market maker also takes exposure risk in the event of large price movements. Profit guarantees for market making strategies have typically required certain stochastic assumptions on the price fluctuations of the a...

Although pricing strategy in marketing is a crucial issue, there islittle literatureon the relationship between pricing and sellers’ reputation based on dynamic pricing data. Using data on Taobao.com, we compare pricing behaviors of two types of sellers, business sellers (T-Mall sellers) which have higher reputation and individual sellers (Tao sellers) which have relatively lower reputation. We...

Lenders’ herding behavior in the peer-to-peer (P2P) lending platform in China is examined. Based on the data from PPdai.com, the largest online P2P lending market in China, we found that herding behavior is salient in P2P lending market in China, and such herding is associated with higher default rate. Keyword: Rational herding, information cascade, peer-to-peer online lending

We study the strategic interaction between the introduction of an online channel by a national brand manufacturer (NBM) and the introduction of store brands by the retailer. We consider three models: (i) the base model without the online channel in the market but the retailer is allowed to introduce the store brand; (ii) the base model without the store brand in the market but the NBM may intro...

Drawing upon the transactional-relational continuum view of exchange, this study provides one of the very first attempts to examine the exchange relationships between individual buyers and sellers in a peer-to-peer online barter market. Using detailed transaction data and weblog data from a leading online market for book exchanges, we find that there is a dichotomy in users’ exchange orientatio...