Exposing eBay evil

7th May, 2005

Dear Economist,
I recently bought a collectible comic book on eBay. The seller had a perfect feedback rating but the book is in far worse condition than he claimed. I am now inclined to post a negative comment – but maybe this is too harsh. Also, I am afraid of retaliation. What would you recommend?

— Jim Hertz, California

Dear Jim,
Let the world know that this guy is a fraud. As most readers will know, eBay is a vast internet-based boot-sale, where people buy and sell all kinds of goods from each other using auctions. After each transaction the buyer and seller publicly rate each other.
This is supposed to encourage honest behaviour, but perhaps because of the doubts you express, 199 out of 200 ratings are positive.
Economists Patrick Bajari and Ali Hortacsu recently surveyed the economic literature their brethren have produced about eBay. They report that you are right to expect retaliation; nearly half of negative ratings are reciprocated. But are you right to fear it?
As far as we economists can tell, eBay sellers enjoy a premium if they collect hundreds of positive ratings; but one or two negative comments do not cause much harm. This makes some sense: after all, it is hard to fake hundreds of satisfied customers.
Negative comments do have one clear effect, though: they make it more likely that subsequent negative comments will be posted quickly. Apparently, some sellers are behaving badly but nobody wants to be the first to say so. By opening the floodgates you will do other eBay users a favour. And if this really is just a one-off, the seller will not suffer. Meanwhile, his retaliatory comment will not harm your own dealings – unless you have a queue of dissatisfied customers just waiting for an excuse to say so.

First published at ft.com .

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