Trust and Reputation in Internet Auctions

Exchange between anonymous actors in Internet auctions corresponds to a one-shot prisoner's dilemma-like situation. Therefore, in any given auction the risk is high that seller and buyer will cheat and, as a consequence, that the market will collapse. However, mutual cooperation can be attained by the simple and very efficient institution of a public rating system. By this system, sellers have incentives to invest in reputation in order to enhance future chances of business. Using data from about 200 auctions of mobile phones we empirically explore the effects of the reputation system. In general, the analysis of nonobtrusive data from auctions may help to gain a deeper understanding of basic social processes of exchange, reputation, trust, and cooperation, and of the impact of institutions on the efficiency of markets. In this study we report empirical estimates of effects of reputation on characteristics of transactions such as the probability of a successful deal, the mode of payment, and the selling price (highest bid). In particular, we try to answer the question whether sellers receive a "premium" for reputation. Our results show that buyers are willing to pay higher prices for reputation in order to diminish the risk of exploitation. On the other hand, sellers protect themselves from cheating buyers by the choice of an appropriate payment mode. Therefore, despite the risk of mutual opportunistic behavior, simple institutional settings lead to cooperation, relatively rare events of fraud, and efficient markets.

Strain-induced structural instability in FeRh

We perform density functional calculations to investigate the structure of the intermetallic alloy FeRh under epitaxial strain. Bulk FeRh exhibits a metamagnetic transition from a low-temperature antiferromagnetic (AFM) phase to a ferromagnetic phase at 350 K, and its strain dependence is of interest for tuning the transition temperature to the room-temperature operating conditions of typical memory devices. We find an unusually strong dependence of the structural energetics on the choice of exchange-correlation functional, with the usual local density approximation yielding the wrong ground-state structure, and generalized gradient (GGA) extensions being in better agreement with the bulk experimental structure. Using the GGA we show the existence of a metastable face-centered-cubic-like AFM structure that is reached from the ground-state body-centered-cubic-like AFM structure by following the epitaxial Bain path. We show that the behavior is well described using nonlinear elasticity theory, which captures the softening and eventual sign change of the orthorhombic shear modulus under compressive strain, consistent with this structural instability. Finally, we predict the existence of an additional unit-cell-doubling lattice instability, which should be observable at low temperature.