eBay Reputation Squabble Leads to Lawsuits

posted by eric

A $2.33 transaction followed by (incorrect) negative feedback resulted in a yearlong dispute. Gives an impression on how important reputation is to sellers on eBay. [via Opinity]

August 10th, 2006

The System of Reputation

posted by alex

Later today we are meeting up with RapLeaf CEO Auren Hoffman so here are some current pre-talk thoughts. When talking about reputation systems I think it is important to keep two things that aren’t mentioned that often in mind:

1) Input is unevenly distributed
2) Reputation need not be explicit

According to this talk there has been much research concerned with the functionality of reputation systems such as the ones on eBay or Amazon. Many studies show that the users inclinations to provide feedback is highly asymmetrical depending on if their experience is positive or negative. Users will give positive feedback on a deal gone right but will avoid giving negative feedback on deals gone bad. Why? Fear of retaliation.

Online reputation has become so important to people that the fear of upsetting your personal reputation stock value is simply higher than the drive to perform good for the community. Say that you just scammed me on Amazon and I just lost some money. The question is what I now have to gain by giving negative feedback about you? I have already lost my money and by giving you negative feedback, by means of reciprocation I am also gaining risk of your negative feedback retaliation and thus a decrease of my personal reputation score.

Conversely, if you actually didn’t scam me and the transaction went well, I might be inclined to give you a higher rating than necessary since you might reciprocate this by in return giving me a higher score (i.e. increasing my personal reputation stock value). So, we have a situation where we lack negative feedback and incentivize the polarization of positive feedback which naturally begs the question: Are reputation systems really useful at all?

Of course they are, but only to a certain extent. Moreover, one needs to take these system distortions into account when assessing the reputation value of people. On Amazon for instance, it seems to me that nobody that has a rating has one that is lower than say 90%. In other words, the 0-89 of the 100 unit scale are never used. In this scenario 91 is a terrible rating while 95 is OK and 99 is pretty good. Furthermore the rating can be seen as a proof of previous transactions that in itself provides a certain limited amount of trustworthiness.

Alex99reputationThe second issue I’d like to address is that in offline-life reputation is rarely explicated in the form of a numerical score. Yet, since the beginning of the net we’ve always had ways of hinting about a persons reputation anyway. Like I mentioned here, online, just like offline, we have certain social cues for reading people and assessing their character. In a forum setting most people gain reputation by the amount of posts they have made, how long they have been members, etc. In the days of social networking we can use connections to others to establish if a person is trustworthy or not. These cues aren’t explicit reputation cues or measurements but we still use them in this way–just like in real life. A numerical specific reputation value can be a quick and easy way to judge somebody but also, for the same reason, a highly motivating attribute to try to “game”.

Reputation will always be present, whether we have an explicit system for it or not. The question is–do we want it to be explicit and numerical? In the Amazon system, the inherent problems become a way of obscuring the explicitness of the system and translating it into an implicit cue about reputation. In other words, we are putting numbers on stuff to explain tricky phenomena and at the same time figuring out new ways of interpreting what these numbers really mean.

Stalking The Predators

posted by alex

Eric and I are currently down at the disneyland of the tech world–Google. We are just about to check out a techtalk by Will Wright on Spore but I thought I’d post a few reflections that surfaced during yesterday’s meeting with Professor BJ Fogg and David Danielsson from the Stanford Persuasive Technology Lab.

We were talking about establishing online trust when BJ had this interesting idea for a slightly unorthodox case study approach. Instead of trying to look at desirable mechanics of trust online (how trust can enhance the online experience) we could flip the whole concept around and learn about the same things by looking at the people who maliciously deal with establishing trust as a profession–I am, of course, talking about the predators.

Predators are probably the most well-educated in the mechanics of establishing trust online since their whole agenda deeply depends on it. Myspace predators constantly seek to establish trust as fast as possible and are sure to know the ins and outs of trust-enhancing social interaction within that system. To exploit a system, technical or social, you really have to know how to “work it”.

Now, what I have been thinking about is how to get in contact with serious predators and get insight into their tactics and views on their “work”. One idea I had after talking to Mike Micucci, CEO of TN20 and hearing about his problems concerning the scam-proposals put forward to him when selling his car on eBay would be to create an online potential victim. I could create a fake ad for an expensive car, add a made-up person to Myspace, enter a non-existing CEO on LinkedIn and then wait for scammers to contact me. Once contact has been established I could “come clean”, explain the research and try to start a conversation with the intention of getting their comments on trust. Am I being naive in thinking this might yield some results?

Yet, on the other hand, the whole idea of faking identities and ads makes me feel slightly uneasy. Is this an ethical way of finding interview subjects? Is it safe? Let me know what you think!

What Is Trust?

posted by eric

The deeper we dive into this study, the more we realize how vague the term “trust” really is. It becomes especially evident as soon as one starts to study a particular trust-related phenomenon (such as buyer-seller trust in online marketplaces). One quickly realizes that “trust” is often a much too general term to use–it is commonly used as a “catch-all” for more specific concepts. There’s clearly a problem of “semantic discrepancies” in the current discourse (but then again, that seems to be the issue in almost any hot enough discourse).

Trust, at least seen pragmatically, can be broken down into more precise concepts such as reputation, credibility, predictability, and consistency. The credibility people at Stanford have done a fairly good job of distinguishing credibility from trust, whereas Seligman tries to separate out “simple” predictability from trust. Many more similar efforts can be found in the literature. We’ll dig more deeply into these semantic issues within the next few days.

In the meantime, here’s an independent study commissioned by Rapleaf on online marketplaces that concludes that “posted ratings are the most important factor in determining their level of trust in sellers” (my emphasis). We hope to do an interview with the Rapleaf guys soon. Their plan is to make an eBay-like reputation system available through open API:s, in essence creating a global, open reputation system. I really think it’s about time, but it remains to be seen how well they can solve the obvious fraud problems

UPDATE: Here are the full details of the study.