@article{5330,
  abstract     = {{In Internet transactions, customers and service providers often interact once and anonymously.
To prevent deceptive behavior a reputation system is particularly important to
reduce information asymmetries about the quality of the offered product or service. In this
study we examine the effectiveness of a reputation system to reduce information asymmetries
when customers may make mistakes in judging the provided service quality. In our model,
a service provider makes strategic quality choices and short-lived customers are asked to
evaluate the observed quality by providing ratings to a reputation system. The customer is
not able to always evaluate the service quality correctly and possibly submits an erroneous
rating according to a predefined probability. Considering reputation profiles of the last three
sales, within the theoretical model we derive that the service provider’s dichotomous quality
decisions are independent of the reputation profile and depend only on the probabilities of
receiving positive and negative ratings when providing low or high quality. Thus, a service
provider optimally either maintains a good reputation or completely refrains from any reputation
building process. However, when mapping our theoretical model to an experimental
design we find that a significant share of subjects in the role of the service provider deviates
from optimal behavior and chooses actions which are conditional on the current reputation
profile. With respect to these individual quality choices we see that subjects use milking
strategies which means that they exploit a good reputation. In particular, if the sales price
is high, low quality is delivered until the price drops below a certain threshold, and then
high quality is chosen until the price increases again.}},
  author       = {{Mir Djawadi, Behnud and Fahr, Rene and Haake, Claus-Jochen and Recker, Sonja}},
  issn         = {{1932-6203}},
  journal      = {{PLoS ONE}},
  number       = {{11}},
  publisher    = {{Public Library of Science}},
  title        = {{{Maintaining vs. Milking Good Reputation when Customer Feedback is Inaccurate}}},
  doi          = {{10.1371/journal.pone.0207172}},
  volume       = {{13}},
  year         = {{2018}},
}