Building trust in online auction markets through an economic incentive mechanism

Millions of dollars change hands daily through online auction markets. However, fraud has been on the rise in these markets. Using a game theoretic approach, we propose a design of an economic incentive mechanism, the trusted third party (TTP), to serve the online auction communities. The proposed m...

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Bibliographic Details
Published inDecision Support Systems Vol. 35; no. 3; pp. 273 - 286
Main Authors Ba, Sulin, Whinston, Andrew B., Zhang, Han
Format Journal Article
LanguageEnglish
Published Amsterdam Elsevier B.V 01.06.2003
Elsevier Sequoia S.A
Subjects
Auctions
Certification authority
Digital certificate
Digital certificates
Economic models
Electronic commerce
Electronic markets
Fraud
Game theory
Online auction
Studies
Third party
Trust
Trusted third party
Electronic markets
Certification authority
Online auction
Digital certificate
Electronic commerce
Trusted third party
Trust
Game theory
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Summary:Millions of dollars change hands daily through online auction markets. However, fraud has been on the rise in these markets. Using a game theoretic approach, we propose a design of an economic incentive mechanism, the trusted third party (TTP), to serve the online auction communities. The proposed model addresses both the economic and technological aspects of online auction transactions by assigning a digital certificate to each participant. Thus, each participant's identity as well as his or her reputation can be established by other market participants. The analytical results demonstrate that when online transactions take place with the assistance of digital certificates issued by a TTP, the most utilitarian course of action for a market participant is to behave honestly.
Bibliography:ObjectType-Article-2
SourceType-Scholarly Journals-1
ObjectType-Feature-1
content type line 23
ISSN:0167-9236
1873-5797
DOI:10.1016/S0167-9236(02)00074-X