Internet Exchange and Forms of Trust

Abstract

All economic exchange entails some uncertainty, but uncertainty is exacerbated in periods of social change that disrupt conventional patterns and modes of exchange. The increasing reliance on the Internet as a medium for exchange has greatly increased uncertainty, raising particular problems of trust between parties. This study examines how information that may reduce uncertainty affects individuals’ trust in online exchange. Within an experimental marketplace, subjects make purchase decisions with a series of simulated vendors. Subjects receive information about vendors in the form of ratings of transaction security that vary as to the source of reputation information (interpersonal vs. institutional sources) and the content of information (rating of reliability vs. capability for engaging in secure transactions). Subjects are more likely to trust vendors when given reputation information from institutional sources, but they do not differentiate capability from reliability information in evaluating vendors in this context.