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On the Incentive Effect of Reputation Systems

Reputation systems flourish as a kind of mechanism to foster trust in the e-commerce environment. However, people do witness that sellers behave maliciously despite the damage on their reputations. This introduces a question on how we can identify if a reputation system is effectively producing incentives to sellers. By extending our previous work, we use a game-theory model to disclose the conditions when a reputation system is able to effectively produce incentive to a seller. Discussion is made on how other environmental factors impact reputation systems. We use a use case to demonstrate how to apply our model in checking the effectiveness of reputations systems.