Lemons on the Web: A signalling approach to the problem of trust in Internet commerce

Boon Chye Lee*, Lawrence Ang, Chris Dubelaar

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

64 Citations (Scopus)

Abstract

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 money-back guarantee, branding, and privacy statement, and test their efficacy. Our empirical results confirm the predictions suggested by signalling theory.

Original languageEnglish
Pages (from-to)607-623
Number of pages17
JournalJournal of Economic Psychology
Volume26
Issue number5
DOIs
Publication statusPublished - Oct 2005

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