2016
Working Paper
HBS Working Paper Series

Designing Online Marketplaces: Trust and Reputation Mechanisms

Format:Print
| Language:English
| Pages:30

Abstract

Online marketplaces have proliferated over the past decade, creating new markets where none existed. By reducing transaction costs, online marketplaces facilitate transactions that otherwise would not have occurred and enable easier entry of small sellers. One central challenge faced by designers of online marketplaces is how to build enough trust to facilitate transactions between strangers. This paper provides an economist’s toolkit for designing online marketplaces, focusing on trust and reputation mechanisms.

Keywords

Market Design; Internet and the Web; Reputation; Trust

Citation

Luca, Michael. "Designing Online Marketplaces: Trust and Reputation Mechanisms." Harvard Business School Working Paper, No. 17-017, September 2016. (Forthcoming in NBER IPE book.)