Price, quality, and reputation: evidence from an online field experiment

We examine the link between price, quality, seller claims, and seller reputation in Internet auctions. After purchasing actual baseball cards and having them professionally graded, we find that some buyers in the online graded market are misled by incredible claims of quality. They pay higher prices but do not receive better quality and, in fact, are defrauded more often. Online seller reputation is effective for identifying good faith sellers. But conditional on completed auctions, reputable sellers do not provide better quality. Evidence also suggests that high-claim sellers target less-experienced buyers. We attribute these patterns to two loopholes in the eBay rating system.