Analyzing the Impact of Public Buyer–Seller Engagement During Online Auctions

Information asymmetry between sellers and buyers is inherent in online markets where transactions often occur between strangers. Trust-building mechanisms such as seller feedback ratings have reduced these problems because a seller’s feedback ratings build buyers’ trust in the seller before they engage in a transaction. However, these ratings are retrospective, that is, they generate information about a transaction after it is completed, rather than during the transaction itself. Additionally, they are based on other users’ experiences, possibly in different contexts, not based on any direct interaction between the prospective buyer and the seller. To address this problem, we study public buyer–seller engagement via question and answer during online auctions and find that seller engagement (responding to buyers’ questions) can affect buyer behavior, including those who do not ask any questions. Our analysis shows that the impact of the seller’s engagement on buyer behavior varies with product type and seller reputation (feedback ratings). A key insight is that sellers with higher reputation reap greater benefits from this engagement than other sellers. We also find that the cost of an additional negative feedback rating outweighs the benefit of a positive one. Seller and product authentication problems are inherent in online markets, particularly in the time-constrained setting of online auctions. Although trust-building mechanisms such as seller feedback can mitigate these problems, they are retrospective, providing information about a transaction only after it is completed. Also, they have only indirect effects on buyers’ trust in sellers because they are not based on direct interactions between a trustor (buyer) and a trustee (seller). On the other hand, direct engagement between transacting parties during an online auction, particularly open and public engagement, reduces information asymmetry between buyers and sellers and has a direct effect on buyers’ trust. In this paper, we analyze how public buyer–seller engagement via question and answer (Q&A) during online auctions impacts bidding behavior. Analyzing auction data from a large auction platform that supports public Q&A between buyers and sellers, we show that the seller’s engagement with buyers during an auction can significantly impact the behavior of both buyers who ask questions and lurkers who passively observe the engagement (spillover effect). Our analysis also shows that the impact of the