Trust in online auctions and the role of reputation, information, trusteeship and price level

In online auctions bidders and sellers are in a position to act opportunistically by exploiting asymmetric information. In this article known solutions from rational choice theory for this problem of trust, namely reputation, information and trusteeship are presented, and tested empirically. In addition price level effects are taken into account and estimations are controlled for predictions from auction theory. The empirical focus is put on the exact observation of auctions of three common-value goods, which results in data about 717 auctions on eBay Germany. In accordance with auction theory reputation effects are only found for the price, but not for the success of an auction. Also the donation of information only partially shows the expected effects. Trusteeship generates a crowding-out effect, so that it even leads into less trust. Astonishingly no effect of the price level of the goods can be found.