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Electronic Commerce Research

, Volume 19, Issue 1, pp 231–255 | Cite as

An incentive mechanism to promote honesty among seller agents in electronic marketplaces

  • Mohammad Riazati
  • Mehdi ShajariEmail author
  • Siavash Khorsandi
Article

Abstract

With the rapid development of online shopping, usually, sellers and buyers have virtual identities, which are not verified beforehand. As a result, establishing trust between sellers and buyers is much harder than before where sellers and buyers would meet face to face before making any transaction. In this work, we propose a method for the marketplace management under anonymous buyers and sellers which makes the honest behavior the most profiting action for rational sellers. In this method, the market operator adopts an honesty promoting mechanism based on direct reward and punishment in which being honest is the most profitable action. In most online marketplaces, a fee or commission is deducted from every payment before settling the account up with the seller. As such, with the dynamic adjustment of the fee, it is possible to reward or punish the seller. The correctness of this method is proven using mathematical models. The apparatus, processes, and algorithms for the marketplace are elaborated in detail so that market operators can easily apply the method in their existing marketplaces.

Keywords

Honesty Trust E-marketplaces Reward and punish 

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Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2018

Authors and Affiliations

  • Mohammad Riazati
    • 1
  • Mehdi Shajari
    • 1
    Email author
  • Siavash Khorsandi
    • 1
  1. 1.Computer Engineering and Information Technology DepartmentAmirkabir University of TechnologyTehranIran

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