Trust, goodwill and identity on electronic markets
The trust on which even the simplest exchange transactions rely has particular importance on electronic markets. Starting out from a game-theory model, the author clarifies how casual partners can overcome shortage of information about each others' strategic choices, and how they can improve their payments in repeated games by applying the 'trigger' or 'eye-for-an-eye' strategy. Buyer-seller relations on the Web are usually casual and call for innovative confidence-building measures to reduce the risk. Examples of such measures are efforts to institutionalize fellow feeling among buyers, through actions designed to build up or knock down reputations. In principle, buyers can only decide on the efficacy of software and other intellectual products once they possess them, but until they are convinced of their efficacy, there is no sense in buying them. The inconsistency can be dispelled, however, by other buyers retailing their experiences on the Internet. By adopting an advisory or warning role, they help their fellow buyers to reach their decisions. Distrust between partners is also dispelled by intermediaries trading on their own good name (from auctioneers to standards institutions). The study also looks at the specific constraints on the development of trust in electronic transactions, with special regard to the scope for identity changes.
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