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Article: Incorporating the Time-Order Effect of Feedback in Online Auction Markets through a Bayesian Updating Model

TitleIncorporating the Time-Order Effect of Feedback in Online Auction Markets through a Bayesian Updating Model
Authors
KeywordsAuction markets
price premium
Bayesian updating
game theory
time-order effect
Issue Date2021
PublisherMIS Research Center. The Journal's web site is located at http://www.misq.org/
Citation
MIS Quarterly, 2021, v. 45 n. 2, p. 985-1006 How to Cite?
AbstractOnline auction markets host a large number of transactions every day. The transaction data in auction markets are useful for understanding the buyers and sellers in the market. Previous research has shown that sellers with different levels of reputation, as shown by the ratings and comments left in feedback systems, enjoy different levels of price premiums for their transactions. Feedback scores and feedback texts have been shown to correlate with buyers’ level of trust in a seller and the price premium that buyers are willing to pay (Ba and Pavlou 2002; Pavlou and Dimoka 2006). However, existing models do not consider the time-order effect, which means that feedback posted more recently may be considered more important than feedback posted less recently. This paper addresses this shortcoming by (1) testing the existence of the time-order effect, and (2) proposing a Bayesian updating model to represent buyers’ perceived reputation considering the time-order effect and assessing how well it can explain the variation in buyers’ trust and price premiums. In order to validate the time-order effect and evaluate the proposed model, we conducted a user experiment and collected real-life transaction data from the eBay online auction market. Our results confirm the existence of the time-order effect and the proposed model explains the variation in price premiums better than the benchmark models. The contribution of this research is threefold. First, we verify the time-order effect in the feedback mechanism on price premiums in online markets. Second, we propose a model that provides better explanatory power for price premiums in online auction markets than existing models by incorporating the time-order effect. Third, we provide further evidence for trust building via textual feedback in online auction markets. The study advances the understanding of the feedback mechanism in online auction markets.
Persistent Identifierhttp://hdl.handle.net/10722/300240
ISSN
2023 Impact Factor: 7.0
2023 SCImago Journal Rankings: 4.105
ISI Accession Number ID

 

DC FieldValueLanguage
dc.contributor.authorChau, M-
dc.contributor.authorLi, W-
dc.contributor.authorYang, B-
dc.contributor.authorLee, AJ-
dc.contributor.authorBao, Z-
dc.date.accessioned2021-06-04T08:40:08Z-
dc.date.available2021-06-04T08:40:08Z-
dc.date.issued2021-
dc.identifier.citationMIS Quarterly, 2021, v. 45 n. 2, p. 985-1006-
dc.identifier.issn0276-7783-
dc.identifier.urihttp://hdl.handle.net/10722/300240-
dc.description.abstractOnline auction markets host a large number of transactions every day. The transaction data in auction markets are useful for understanding the buyers and sellers in the market. Previous research has shown that sellers with different levels of reputation, as shown by the ratings and comments left in feedback systems, enjoy different levels of price premiums for their transactions. Feedback scores and feedback texts have been shown to correlate with buyers’ level of trust in a seller and the price premium that buyers are willing to pay (Ba and Pavlou 2002; Pavlou and Dimoka 2006). However, existing models do not consider the time-order effect, which means that feedback posted more recently may be considered more important than feedback posted less recently. This paper addresses this shortcoming by (1) testing the existence of the time-order effect, and (2) proposing a Bayesian updating model to represent buyers’ perceived reputation considering the time-order effect and assessing how well it can explain the variation in buyers’ trust and price premiums. In order to validate the time-order effect and evaluate the proposed model, we conducted a user experiment and collected real-life transaction data from the eBay online auction market. Our results confirm the existence of the time-order effect and the proposed model explains the variation in price premiums better than the benchmark models. The contribution of this research is threefold. First, we verify the time-order effect in the feedback mechanism on price premiums in online markets. Second, we propose a model that provides better explanatory power for price premiums in online auction markets than existing models by incorporating the time-order effect. Third, we provide further evidence for trust building via textual feedback in online auction markets. The study advances the understanding of the feedback mechanism in online auction markets.-
dc.languageeng-
dc.publisherMIS Research Center. The Journal's web site is located at http://www.misq.org/-
dc.relation.ispartofMIS Quarterly-
dc.subjectAuction markets-
dc.subjectprice premium-
dc.subjectBayesian updating-
dc.subjectgame theory-
dc.subjecttime-order effect-
dc.titleIncorporating the Time-Order Effect of Feedback in Online Auction Markets through a Bayesian Updating Model-
dc.typeArticle-
dc.identifier.emailChau, M: mchau@business.hku.hk-
dc.identifier.authorityChau, M=rp01051-
dc.description.naturelink_to_subscribed_fulltext-
dc.identifier.doi10.25300/MISQ/2021/15324-
dc.identifier.scopuseid_2-s2.0-85114678949-
dc.identifier.hkuros322749-
dc.identifier.volume45-
dc.identifier.issue2-
dc.identifier.spage985-
dc.identifier.epage1006-
dc.identifier.isiWOS:000655470700015-
dc.publisher.placeUnited States-

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