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Reputation Inflation

Published: 11 June 2018 Publication History

Abstract

A solution to marketplace information asymmetries is to have trading partners publicly rate each other post-transaction. Many have shown these ratings are effective; we show that their effectiveness deteriorates over time. The problem is that ratings are prone to inflation, with raters feeling pressure to leave "above average" ratings, which in turn pushes the average higher. This pressure stems from raters' desire to not harm the rated seller. As the potential to harm is what makes ratings effective, reputation systems, as currently designed, sow the seeds of their own irrelevance.

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MP4 File (p483.mp4)

Reference

[1]
Apostolos Filippas, John J. Horton, and Joseph Golden. 2018. Reputation inflation. (2018).

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cover image ACM Conferences
EC '18: Proceedings of the 2018 ACM Conference on Economics and Computation
June 2018
713 pages
ISBN:9781450358293
DOI:10.1145/3219166
Permission to make digital or hard copies of part or all of this work for personal or classroom use is granted without fee provided that copies are not made or distributed for profit or commercial advantage and that copies bear this notice and the full citation on the first page. Copyrights for third-party components of this work must be honored. For all other uses, contact the Owner/Author.

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Association for Computing Machinery

New York, NY, United States

Publication History

Published: 11 June 2018

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Author Tags

  1. experimentation
  2. marketplaces
  3. reputation systems

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EC '18
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Overall Acceptance Rate 176 of 611 submissions, 29%

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  • (2024)Does AI Cheapen Talk? Evidence From Global Startup and Hiring ContextsSSRN Electronic Journal10.2139/ssrn.4702114Online publication date: 2024
  • (2024)Eliciting Informative Text Evaluations with Large Language ModelsProceedings of the 25th ACM Conference on Economics and Computation10.1145/3670865.3673532(582-612)Online publication date: 8-Jul-2024
  • (2024)RCTD: Reputation-Constrained Truth Discovery in Sybil Attack Crowdsourcing EnvironmentProceedings of the 30th ACM SIGKDD Conference on Knowledge Discovery and Data Mining10.1145/3637528.3671803(1313-1324)Online publication date: 25-Aug-2024
  • (2024)Delegation in Hiring: Evidence from a Two-Sided AuditJournal of Political Economy Microeconomics10.1086/732127Online publication date: 9-Jul-2024
  • (2024)How Ratings Shape the Supply on Sharing Economy Platforms: A Longitudinal Cohort Study on Listing Survival on AirbnbInformation Systems Management10.1080/10580530.2024.2339234(1-17)Online publication date: 21-Apr-2024
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  • (2024)Reducing organizational inequalities associated with algorithmic controlsDiscover Artificial Intelligence10.1007/s44163-024-00137-04:1Online publication date: 15-May-2024
  • (2023)Optimal information disclosure and market outcomesTheoretical Economics10.3982/TE510418:4(1317-1344)Online publication date: 2023
  • (2023)Online Reviews: A Literature Review and Roadmap for Future ResearchSSRN Electronic Journal10.2139/ssrn.4565563Online publication date: 2023
  • (2023)Interface Design to Mitigate Inflation in Recommender SystemsProceedings of the 17th ACM Conference on Recommender Systems10.1145/3604915.3608846(897-903)Online publication date: 14-Sep-2023
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