eBay used as behavioral laboratory

This study from the University of Michigan used eBay to determine whether a seller's reputation helped them get higher prices:

"People with good reputations are rewarded and people with no reputations are not trusted as well as people who have established reputations," said Paul Resnick, professor in the U-M School of Information and the study's principal author.

The study is the first known randomized controlled look at the value of eBay reputations in the natural setting of actual eBay auctions. The findings showed that eBay's feedback system--the cornerstone of the online auction site--works as it should, by rewarding sellers who have more positive feedback.

The study, "The Value of Reputation on eBay: A Controlled Experiment," is available online in the journal Experimental Economics. It was co-written by Resnick, Richard Zeckhauser of Harvard University, graduate student Kate Lockwood and eBay seller John Swanson.

Surprisingly, the researchers found that one or two negative feedbacks did not hurt new sellers, but it remains unclear why buyers are willing to cut new sellers with negative feedback a little slack.

They offer several explanations, but Resnick said it's likely that buyers are leery of new sellers no matter what the feedback.

"Either way, they aren't trusted," he said.

...

There is still much to be learned about the value of feedback on eBay and other online auction sites, Resnick said. His group is currently trying to estimate how frequently buyers and sellers reciprocate the positive feedback they get from one another versus just independently rating the transactions. In this way, researchers will understand what the feedback really means and how informative it is overall.

In earlier work, the group discovered that negative feedback on eBay comes in clumps, and that is partly a result of "stoning," where buyers are more apt to throw stones once they see one negative feedback. The results did not show that sellers changed their behavior after receiving negative feedback.

Actually the most interesting part about this study for me is that they were using eBay. Sites like eBay, MySpace, and Match.com are really underutilized resources for scientific work in that they constitute some of the largest sociological and economic databases every constructed. Say you wanted to construct a relationship diagram between individuals ala sociology -- where better to look for that information than MySpace? This data is out there, and we should be using it more.