Social Structure and Trust in Massive Digital Markets

International Conference on Information Systems (ICIS)


Embedding games in networks creates trust when the network is sufficiently dense and/or the players are sufficiently central. But, while much existing research examines how formal reputation signals, like ratings or reviews, enhance trust and facilitate market transactions, almost no research explores the role of networked social signals in generating trust in such marketplaces. Here, we measure the extent to which situating transactions in networks can generate trust in online marketplaces with an empirical approach that provides external validity while eliminating many potential confounds. Using micro-level data on ~1.6M sales posts in Facebook buy and sell groups, we find that both increased network density and seller degree centrality increase two-sided interest in transacting. These results suggest that network structure can produce trust in marketplace transactions and imply that network-based trust mechanisms can offer an appealing alternative to formal reputation systems in mitigating moral hazard and adverse selection in digital marketplaces.

Related Publications

All Publications

NeurIPS - December 6, 2020

High-Dimensional Contextual Policy Search with Unknown Context Rewards using Bayesian Optimization

Qing Feng, Benjamin Letham, Hongzi Mao, Eytan Bakshy

Innovative Technology at the Interface of Finance and Operations - March 31, 2021

Market Equilibrium Models in Large-Scale Internet Markets

Christian Kroer, Nicolas E. Stier-Moses

JMLR - February 11, 2021

The Decoupled Extended Kalman Filter for Dynamic Exponential-Family Factorization Models

Carlos A. Gómez-Uribe, Brian Karrer

To help personalize content, tailor and measure ads, and provide a safer experience, we use cookies. By clicking or navigating the site, you agree to allow our collection of information on and off Facebook through cookies. Learn more, including about available controls: Cookies Policy