Jindal School Professor Offers Insights on Internet Trading Feedback

Dr. Gary Bolton

Dr. Gary Bolton

People are usually surprised that as many as 70 percent of participants on Internet trading sites provide feedback about their experiences, Dr. Gary Bolton said in his keynote address during the 26th Workshop on Information Systems and Economics (WISE)

“Most people seem to think it’s like 10 percent, something like that,” he said. “A lot of feedback is offered through these systems.” 

WISE, hosted recently by the Naveen Jindal School of Management, focused on the economic consequences of information technology advances and innovation. 

Bolton, O.P. Jindal Distinguished Chair of Managerial Economics in the Jindal School and co-director of its Center and Laboratory for Behavioral Operations and Economics, said the “brag and moan phenomenon” is, for him, a particular draw of the feedback. In the phenomenon, responses tend to cluster at extremes, with a large majority of positive opinions at one end and a small percentage of negative opinions at the other, but virtually no ratings in the middle. 

With such high numbers of favorable opinions dominating at the top, trading-site executives might think “there’s an incredible amount of happiness in the market,” Bolton said.

But his research and other studies have proved otherwise. 

In surveys, Bolton uncovered that in timed feedback, when buyers went first and gave negative reviews, sellers also would often respond with negative feedback. This “retaliation” could challenge the credibility of positive feedback, he said. 

Asked by eBay to find remedies, Bolton designed and tested several possible fixes. Double-blind feedback, in which neither seller nor buyer can see each other’s responses until they are completed, reduces the overall amount of feedback, he said. 

A subsequent hybrid method, which couples conventional feedback (CF) with detailed seller ratings (DSR) given later and anonymously, has elicited more honest feedback, Bolton said. The hybrid also has compiled evidence — showing that sellers with better DSR scores have higher frequencies of trade — that indicates the system has improved. 

The hope with the CF-DSR system is that there would be much less of the brag and moan phenomenon, Bolton said. But that has not happened. 

So he is now investigating a “leniency hypothesis” that begins, he said “with the observation that in a lot of trades, when something goes wrong, there is some uncertainty about why it went wrong.” Because of doubt, people may be reluctant to give a negative rating. 

He presented experimental evidence showing that leniency leads to more trader misbehavior because misbehavior is less likely to be punished with negative feedback.

He concluded his address with some thoughts on how the leniency effect might be combated, either by reducing attributional uncertainty or constructing feedback systems that rely more heavily on traders who prove themselves less susceptible to the leniency effect.

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