Trust and Reputation in Historical Markets and Contemporary Online Markets

Andreas Diekmann*, Wojtek Przepiorka

*Corresponding author for this work

Research output: Chapter in Book/Report/Conference proceedingChapterAcademic

Abstract

Economic transactions are subject to trust problems, which can be solved by means of long-term business relations, by institutional regulations or by reputational incentives. In this chapter, we first deal with the problems related to trust and their various solutions. We then discuss the way the reputation mechanism has worked in markets in historical societies and in online markets in contemporary societies. Although the reputation mechanism worked similarly in the past, as it does today, the technologies available to communicate information about reputation have changed. This is particularly evident in online markets, in which electronic rating systems have become an essential element. In the third part of this chapter, we focus on the development, forms, and consequences of reputation in online markets. Reputation information must be credible in order to promote cooperative market exchange. For reputation information to be credible, simple means of deception must be unavailable. We conclude this chapter by dealing with the downside of reputation systems.
Original languageEnglish
Title of host publicationHandbook of Economic Sociology for the 21st Century
Subtitle of host publicationNew Theoretical Approaches, Empirical Studies and Developments
EditorsAndrea Maurer
Place of PublicationCham
PublisherSpringer
Pages131-145
Edition1
ISBN (Electronic)978-3-030-61619-9
ISBN (Print)978-3-030-61618-2, 978-3-030-61621-2
DOIs
Publication statusPublished - 9 May 2021

Publication series

NameHandbooks of Sociology and Social Research
PublisherSpringer

Keywords

  • Trust
  • Trustworthiness
  • Asymmetric information
  • Online market
  • Reputation system
  • Evolution of institutions
  • Decentralized rating systems

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