Despite their many advantages, e-Businesses lag behind brick and mortar businesses in several fundamental respects. This paper concerns one of these: relationships based on trust and reputation. Recent studies on simple reputation systems for e-Businesses such as eBay have pointed to the importance of such rating systems for deterring moral hazard and encouraging trusting interactions. However, despite numerous studies on trust and reputation systems, few have taken studies across disciplines to provide an integrated account of these concepts and their relationships. This paper first surveys existing literatures on trust, reputation and a related concept: reciprocity. Based on sociological and biological understandings of these concepts, a computational model is proposed. This model can be implemented in a real system to consistently calculate agents ’ trust and reputation scores. 1.

Abstract not found

Trust is central to all transactions and yet economists rarely discuss the notion. It is treated...

Sociological investigations of economic exchange reveal how institutions and social structures shape transaction patterns among economic actors. This article explores how interfirm networks in the U.S. venture capital (VC) market affect spatial patterns of exchange. Evidence suggests that information about potential investment opportunities generally circulates within geographic and industry spaces. In turn, the circumscribed flow of information within these spaces contributes to the geographic- and industry-localization of VC investments. Empirical analyses demonstrate that the social networks in the VC community—built up through the industry’s extensive use of syndicated investing—diffuse information across boundaries and therefore expand the spatial radius of exchange. Venture capitalists that build axial positions in the industry’s coinvestment network invest more frequently in spatially distant companies. Thus, variation in actors ’ positioning within the structure of the market appears to differentiate market participants ’ ability to overcome boundaries that otherwise would curtail exchange.

We consider the problem of user agents selecting processor agents to processor tasks. We assume that processor agents are drawn from two populations: high and low-performing processors with di#erent averages but similar variance in performance. For selecting a processor, a user agent queries other user agents for their high/low rating of di#erent processors. We assume that a known percentage of "liar" users, who give inverse estimates of processors. We develop a trust mechanism that determines the number of users to query given a target guarantee threshold likelihood of choosing high-performance processors in the face of such "noisy" reputation mechanisms. We evaluate the robustness of this reputation-based trusting mechanism over varying environmental parameters like percentage of liars, performance difference and variances for high and low-performing agents, learning rates, etc.

This paper specifies a generalizable model of exchange processes and develops a processstakeholder analysis framework to evaluate alternative market designs. This framework is applied to analyze a number of information technology initiatives in the Dutch flower markets. The Dutch flower auctions are the world’s leading centers for trading cut flowers and potted plants. We undertake a cross-case analysis and apply our framework to analyse successes and failures in the introduction of new IT-based trading mechanisms in these markets. Based on our study, we develop a number of testable propositions on: the separation of physical and informational processes in trading, the responses of stakeholders to changes in available information due to IT initiatives, and economic and incentive conditions required for adoption of new trading processes. Finally, our detailed cases illustrate the institutional and incentive constraints, and complexities encountered in the introduction of new electronic markets.

The language of game theory—coalitions, payo¤s, markets, votes— suggests that it is not a branch of abstract mathematics; that it is motivated by and related to the world around us; and that it should be able to

Banks and other lenders often transfer credit risk in order to liberate capi-tal for further loan intermediation. Beyond selling loans outright, lenders are increasingly active in the markets for syndicated loans, collateralized loan obliga-tions (CLOs), credit default swaps, credit derivative product companies, “spe-cialty finance companies, ” and other financial innovations designed for credit risk transfer. My purpose here is to explore the design, prevalence, and effec-tiveness of credit risk transfer. My focus will be the costs and benefits for the efficiency and stability of the financial system. In addition to allowing lenders to conserve costly capital, credit risk transfer can improve financial stability by smoothing out the risks among many investors.

Abstract not found

severe bouts of financial instability that have had devastating impacts on crisis countries such as Mexico (in which GDP growth fell from above 4 percent in 1994 before the crisis to negative 6 percent