In today’s online markets, reputation systems substitute informal sanctioning mechanisms at work in close-knit groups and enable complete strangers to trade with each other across large geographic distances. The organizational features of online markets support actors in solving three problems that hamper mutually beneficial market exchange: the value, competition, and cooperation problems. However, due to the plethora of trading opportunities available online, actors face a problem of excess, i.e., the difficulty of choosing a trading partner. Imitation of other actors’ choices of trading partners (i.e., herding) can solve the problem of excess but at the Wojtek Przepiorka, Ozan Aksoy (2020): Does herding undermine the trust enhancing effect of reputation? An empirical investigation with online-auction data. Social Forces Online First (ungated).
same time lead to the neglect of information about these trading partners’ trustworthiness. Using a large set of online-auction data, this paper investigates whether herding as a strategy for solving the problem ...
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