A network of people connected by directed ratings or trust scores, and a model for propagating those trust scores, is a fundamental building block in many of today's most successful e-commerce and recommendation systems. In eBay, such a model of trust has significant influence on the price an item may command. In Epinions (epinions.com), conclusions drawn from the web of trust are linked to many behaviors of the system, including decisions on items to which each user is exposed. We develop a framework of trust propagation schemes, each of which may be appropriate in certain circumstances, and evaluate the schemes on a large trust network consisting of 800K trust scores expressed among 130K people. We show that a small number of expressed trusts/distrust per individual allows us to predict reliably trust between any two people in the system with high accuracy: a quadratic increase in actionable information. Our work appears to be the first to incorporate distrust in a computational trust propagation setting.

An important part of our information-gathering behavior has always been to find out what other people think. With the growing availability and popularity of opinion-rich resources such as online review sites and personal blogs, new opportunities and challenges arise as people now can, and do, actively use information technologies to seek out and understand the opinions of others. The sudden eruption of activity in the area of opinion mining and sentiment analysis, which deals with the computational treatment of opinion, sentiment, and subjectivity in text, has thus occurred at least in part as a direct response to the surge of interest in new systems that deal directly with opinions as a first-class object. This survey covers techniques and approaches that promise to directly enable opinion-oriented information-seeking systems. Our focus is on methods that seek to address the new challenges raised by sentiment-aware applications, as compared to those that are already present in more traditional fact-based analysis. We include materialon summarization of evaluative text and on broader issues regarding privacy, manipulation, and economic impact that the development of opinion-oriented information-access services gives rise to. To facilitate future work, a discussion of available resources, benchmark datasets, and evaluation campaigns is also provided. 1

Auctions on the Internet provide a new source of data on how bidding is influenced by the detailed rules of the auction. Here we study the second-price auctions run by eBay and Amazon, in which a bidder submits a reservation price and has this (maximum) price used to bid for him by proxy. That is, a bidder can submit his reservation price (called a proxy bid) early in the auction and have the resulting bid register as the minimum increment above the previous high bid. As subsequent reservation prices are submitted, the bid rises by the minimum increment until the second-highest submitted reservation price is exceeded. Hence, an early bid with a reservation price higher than any other submitted during the auction will win the auction and pay only the minimum increment

Online reputation mechanisms are emerging as a promising alternative to more traditional trust building mechanisms, such as branding and formal contracting, in settings where the latter may be ineffective or prohibitively expensive; a lot of electronic trading communities fall under these categories. Although a number of commercial websites already employ various forms of reputation mechanisms, rigorous research into their properties is still in its infancy. This fledgling field can benefit from past results in economics and game theory. Moreover, in order to translate the stylized results of game theory into concrete managerial guidance for implementing and participating in effective reputation mechanisms further advances are needed in a number of important areas: First, the design space of such mechanisms needs to be scoped and the effects of different design choices on performance need to be better understood. Second, the economic efficiency of various classes of reputation mechanisms needs to be quantified and compared to that of alternative mechanisms for building trust. Third, the robustness of those mechanisms against boundedly rational players, noisy ratings and strategic manipulation needs to be studied and improved. This paper surveys past results that have been derived in a variety of contexts, but which are relevant as a basis for building online reputation systems, presents two analytical models that illustrate the role of such systems in electronic markets and identifies opportunities for further MS/OR research in this fascinating area.

The latest version of this working paper can be found at

Price Premiums and Buyer Behavior Despite the wide use of reputational mechanisms such as eBay’s Feedback Forum to promote trust, empirical evidence has shown conflicting results on whether online feedback mechanisms really induce trust and lead to higher auction prices. This study examines the extent to which trust can be induced by proper feedback mechanisms in electronic markets, and how some risk factors play a role in trust formation. Drawing from economic, sociological, and marketing theories and using data from both an online experiment and an online auction market, we demonstrate that appropriate feedback mechanisms can induce calculus-based credibility trust without repeated interactions between two transacting parties. Trust can mitigate information asymmetry by reducing transaction-specific risks, therefore generating price premiums for reputable sellers. In addition, the research also examines the role that trust plays in mitigating the risks in transactions that involve very expensive products or experience products.

Reputation systems provide mechanisms to produce a metric encapsulating reputation for a given domain for each identity within the system. These systems seek to generate an accurate assessment in the face of various factors including but not limited to unprecedented community size and potentially adversarial environments. We focus on attacks and defense mechanisms in reputation systems. We present an analysis framework that allows for general decomposition of existing reputation systems. We classify attacks against reputation systems by identifying which system components and design choices are the target of attacks. We survey defense mechanisms employed by existing reputation systems. Finally, we analyze several landmark systems in the peer-to-peer domain, characterizing their individual strengths and weaknesses. Our work contributes to understanding 1) which design components of reputation systems are most vulnerable, 2) what are the most appropriate defense mechanisms and 3) how these defense mechanisms can be integrated into existing or future reputation systems to make them resilient to attacks.

Reputation mechanisms harness the bi-directional communication capabilities of the Internet in order to engineer large-scale word-of-mouth networks. Best known so far as a technology for building trust and fostering cooperation in online marketplaces, such as eBay, these mechanisms are poised to have a much wider impact on organizations. This paper surveys our progress in understanding the new possibilities and challenges that these mechanisms represent. It discusses some important dimensions in which Internet-based reputation mechanisms differ from traditional word-of-mouth networks and surveys the most important issues related to their design, evaluation, and use. It provides an overview of relevant work in game theory and economics on the topic of reputation. It discusses how this body of work is being extended and combined with insights from computer science, marketing, and psychology in order to take into consid-eration the special properties of online environments. Finally, it identifies opportunities that this new area presents for information systems research. 1

Millions of people participate in online auctions on websites such as eBay. The data available in these public markets offer interesting opportunities to study Internet auctions. We explore techniques for identifying common bidding patterns on eBay using data from eBay video game console auctions. The analysis reveals that there are certain bidding behaviors that appear frequently in the data, some of which have been previously identified and others which are new. We propose new attributes of bidding engagements and rules for classifying strategies. In addition, we suggest economic motivations that might lead to the identified behaviors.

This paper examines the value of information signaling in markets where product and seller quality cannot be observed with certainty. Akerlof (1970) and others have examined the impact of incomplete information on market outcomes. Akerlof posited that the "lemon problem" may cause low prices to crowd out quality goods in a resale market. The basic result of Akerlof's work was that when quality can not be observed with certainty, owners of high quality goods will have no incentive to offer these goods for sale as buyers will not offer a sufficiently high price to induce quality goods on the market. Akerlof termed this the lemon problem. This paper examines the internet-based auctions of high end guitars. In this situation, buyers are not able to gather complete information about either the goods being offered for sale or the sellers offering the goods. Buyers will have some knowledge of the item being offered based upon the reputation of the original product. The internet based resale of high end guitars is an example of the case in which incomplete information may lead to lower prices in the secondary market. In this type of transaction, a seller has significantly more information on the quality of the instrument offered for sale than does the buyer. In addition, many of the important information items needed to value the guitar are highly subjective in nature. For instance, a guitar may be described as being in "mint" or "excellent" condition, or a "9.5 out of 10." All of these descriptors are subjective (though one could devise a set of guidelines in order to make such statements more objective). Other critical elements, namely sound and appearance, are highly subjective as well and it would be difficult to find criteria which would make statements such as "looks grea...