Introduction
We try to analyze the article "How Effective are Online ReputationMechanisms?" written by Gary E Bolton, Elena Katok and Axel Ockenfels in May2002.This article explain in what extent the feedback mechanisms is mitigate themoral hazard problems associated with auction markets on internet.This problem come from the fact that seller could not send the product to hisbuyer when he receive the money if he is not honest, so their is a problem of trust for the buyer. It's a Prisoner's dilemma, a feedback mechanisms maysolve it.First we analyze few references of the authors, then we present the game andhis result, then we try to analyze this study and make few criticism.We realize this table in order to reveal some equilibrium on the strangermarket.
Buyer/SellerShip no ShipBuy
0,5 ; 0,50 ; 0,7
Don't Buy
0,35 ; 0,350,35 ; 0,35
We observe that it is a Prisoner's dilemma which conduct to no transaction.This is understable considering the one-shot effect. The reputation mechanismis here to solve this problem.
Review of litterature
"Does a seller's e-commerce Reputation Matter?" Melnik, M.I and J. Alm
Working paper, Georgia
They examine the willingness to pay for a mint condition US $5 Gold coin on e-Bay in 1999. They wanted to know if the seller's reputation have an impact onthe price of the product. They finally managed after their studies to theconclusion that a good reputation have positive impact on the product price.It's mean that if you have a good reputation you can set a price higher.
"The role of Institutions in the revival of trade: the law merchant, Private judges, and the champagne fairs" Milgrom, North and Weingast
Economics and politics
In this paper, the authors works on the law merchant. This law was applied bygild of merchant in medieval time. This law solves the classic prisoner's
Addressed to Professor Masclet and Professor Denant-Boèmont3
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