Reputation and Feedback Systems in Online Platform Markets∗

Online marketplaces have become ubiquitous as sites like eBay, Taobao, Uber and AirBnB are frequented by billions of users regularly. The success of these marketplaces is attributed not only to the ease in which buyers can find sellers, but also to the fact that they provide reputation and feedback systems that help facilitate trust. I begin by briefly describing the basic ideas of how reputation helps facilitate trust and trade, and offer an overview of how feedback and reputation systems work in online marketplaces. I then describe the literature that explores the effects of reputation and feedback systems on online marketplaces, and highlight some of the problems of bias in feedback and reputation systems as they appear today. I discuss ways to address these problems in order to improve the practical design of online marketplaces and suggest some directions for future research. ∗I am grateful to Oren Reshef for very helpful research assistance and to Tim Bresnahan, the Editor, for helpful feedback on an earlier draft.