Minor Change is Not Enough : Analysis of Ebay's Reputation Model

One of the most popular eCommerce websites, Ebay, has changed its reputation model several times during the last months. Each change in the calculation of the reputation score affects the mean number of transactions the buyer is willing to participate in and the mean payoff for each buyer. While Ebay has never considered unrated transaction for its score, the meaning of neutral evaluations has changed throughout Ebay's lifetime. This paper analyzes the effects of different varieties of their reputation computation. A comparison shows that current model's aim is not to achieve high buyers' payoffs but to get a high number of transactions instead. In fact the current formula has a counter productive effect on the buyers payoffs. The analysis includes recommendations how to change the reputation system to avoid unwanted effects and repair the current weaknesses of the model