Starjournal Quotation Bolton, Gary, Greiner, Ben, Ockenfels, Axel. 2018. Dispute Resolution or Escalation? The Strategic Gaming of Feedback Withdrawal Options in Online Markets. Management Science (MS). 64 (9), 4009-4031.


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Abstract

Many online markets encourage traders to make good after an unsatisfactory transaction by offering the opportunity to withdraw negative reputational feedback in a dispute resolution phase. Motivated by field evidence and guided by theoretical considerations, we use laboratory markets with two-sided moral hazard to show that this option, contrary to the intended purpose, produces an escalation of dispute. The mutual feedback withdrawal option creates an incentive to leave negative feedback, independent of the opponent’s behavior, to improve one’s bargaining position in the dispute resolution phase. This leads to distorted reputation information and less trust and trustworthiness in the trading phase. Buyers who refuse to give feedback strategically, even when it comes at a personal cost, mitigate the detrimental impact. It is also mitigated in markets with one-sided moral hazard and a unilateral feedback withdrawal option.

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Publication's profile

Status of publication Published
Affiliation WU
Type of publication Journal article
Journal Management Science (MS)
Citation Index SSCI
WU Journalrating 2009 A+
Starjournal Y
Language English
Title Dispute Resolution or Escalation? The Strategic Gaming of Feedback Withdrawal Options in Online Markets
Volume 64
Number 9
Year 2018
Page from 4009
Page to 4031
Reviewed? Y
URL https://pubsonline.informs.org/doi/abs/10.1287/mnsc.2017.2802
DOI http://dx.doi.org/10.1287/mnsc.2017.2802
Open Access N

Associations

People
Greiner, Ben (Details)
External
Bolton, Gary (University of Texas at Dallas, United States/USA)
Ockenfels, Axel (University of Cologne, Germany)
Organization
Institute for Markets and Strategy IN (Details)
Competence Center for Experimental Research WE (Details)
Research areas (Ă–STAT Classification 'Statistik Austria')
5307 Business and management economics (Details)
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