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Lemons on the web: a signalling approach to the problem of trust in Internet commerce

journal contribution
posted on 01.10.2005, 00:00 authored by B-C Lee, L Ang, Chris DubelaarChris Dubelaar
Asymmetric information is at the heart of situations involving trust. In the case of B2C
Internet commerce, the information asymmetry typically relates to the difficulty that consumers
have of distinguishing between ‘‘trustworthy’’ and ‘‘untrustworthy’’ Web merchants. The
impasse can be resolved by the use of signals by trustworthy Web merchants to differentiate
themselves from untrustworthy ones. Using an experimental design where subjects are exposed
to a series of purchase choices, we investigate three possible signals, an unconditional moneyback
guarantee, branding, and privacy statement, and test their efficacy. Our empirical results
confirm the predictions suggested by signalling theory.

History

Journal

Journal of economic psychology

Volume

26

Issue

5

Pagination

607 - 623

Publisher

Elsevier

Location

Amsterdam, The Netherlands

ISSN

0167-4870

Language

eng

Publication classification

C1.1 Refereed article in a scholarly journal; C Journal article

Copyright notice

2005, Elsevier