Membangun Kepercayaan Pelanggan (Customer TRUST): Competition Fosters Trust

by : STEFFEN HUCK, GABRIELE K. LÜNSER AND JEAN-ROBERT TYRAN
Published by : JEL Codes: C72, C92, D40, L14, October 2007. pp. 1-26

Abstract

We study the effects of reputation and competition in a stylized market for experience goods. If interaction is anonymous, such markets perform poorly: sellers are not trustworthy, and buyers do not trust sellers. If sellers are identifiable and can, hence, build a reputation, efficiency quadruples but is still at only a third of the first best. Adding more information by granting buyers access to all sellers’ complete history has, somewhat surprisingly, no effect. On the other hand, we find that competition, coupled with some minimal information, eliminates the trust problem almost completely.
Keywords: Experience Goods; Competition; Reputation; Trust; Moral hazard;Information conditions

1. Introduction

Lack of trust and moral hazard are widely seen as serious impediments to economic efficiency and growth. In this paper, we study two remedies against these obstacles: reputation and competition. Using experimental methods we isolate the partial effects of both and obtain surprisingly unambiguous results. Identification of sellers, as a prerequisite for reputation building, has strong positive effects but fails to overcome the moral hazard problem. Adding more information by granting buyers access to all sellers’ complete history has, somewhat surprisingly, no effect. With full public information efficiency remains at just around 30% of the first best. On the other hand, we find that competition, coupled with minimal information, eliminates the trust problem completely. As long as buyers can identify sellers, competition is sufficient to achieve almost full efficiency.

We implement a repeated binary trust .. . . . . . . . . . . . . (baca selengkapnya)

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