Reputation Formation and the Evolution of Cooperation in Anonymous Online Markets

Theoretical propositions stressing the importance of trust, reciprocity, and reputation for cooperation in social exchange relations are deeply rooted in classical sociological thought. Today’s online markets provide a unique opportunity to test these theories using unobtrusive data. Our study investigates the mechanisms promoting cooperation in an online-auction market where most transactions can be conceived as one-time-only exchanges. We first give a systematic account of the theoretical arguments explaining the process of cooperative transactions. Then, using a large dataset comprising 14,627 mobile phone auctions and 339,517 DVD auctions, we test key hypotheses about the effects of traders’ reputations on auction outcomes and traders’ motives for leaving feedback. Our statistical analyses show that sellers with better reputations have higher sales and obtain higher prices. Furthermore, we observe a high rate of participation in the feedback system, which is largely consistent with strong reciprocity—a predisposition to unconditionally reward (or punish) one’s interaction partner’s cooperation (or defection)—and altruism—a predisposition to increase one’s own utility by elevating an interaction partner’s utility. Our study demonstrates how strong reciprocity and altruism can mitigate the free-rider problem in the feedback system to create reputational incentives for mutually beneficial online trade.

Intergenerational Mobility in Switzerland. A Comparison of Methodological Approaches

Despite the widespread interest in the topic and a vast international literature, only little is known about the development of intergenerational mobility in Switzerland. Based on a new harmonized database for Switzerland (comprising various surveys such as different waves of the ISSP, EVS, or the ESS), we provide a systematic account of changes in the link between social origin and destination over time (covering birth cohorts from 1940 through 1980). We analyze effects of parental education and class on own educational achievement and social class for both men and women, using a refined variant of the methodological approach proposed by Jann and Combet (2012). The approach is based on the concept of proportional reduction of error (PRE) and features a number of advantages over more traditional approaches. For example, it provides smooth estimates of changes in social mobility that have a clear interpretation and it can easily incorporate control variables and multiple dimensions of parental characteristics. To evaluate the validity of our approach, we employ the oft-used log-multiplicative layer effect model (Xie 1992) as a benchmark. Results indicate that our approach performs well and produces qualitatively similar findings as Xie’s model. For men, effects of social origin have been stable over the observed period. For women, however, social mobility significantly decreased among younger cohorts, mostly due to expanding female education and labor force participation. Jann, Ben, Benita Combet (2012). Zur Entwicklung der intergenerationalen Mobilität in der Schweiz (On the Development of Intergenerational Mobility in Switzerland). Swiss Journal of Sociology 38(2): 177-199. Xie, Yu (1992). The Log-Multiplicative Layer Effect Model for Comparing Mobility Tables. American Sociological Review 57(3): 380-395.