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Faculty Research Working Paper Series
Nolan Miller
Associate Professor of Public Policy
Eliciting Honest Feedback in Electronic Markets.
Miller, Nolan, Paul Resnick, and Richard Zeckhauser. "Eliciting Honest Feedback in Electronic Markets." KSG Faculty Research Working Papers Series RWP02-039, August 2002.
Abstract
Recommender and reputation systems seek to inform potential customers by securing current consumers' feedback about products and sellers. This paper proposes a payment-based system to induce honest reporting of feedback. The system applies proper scoring rules to each buyer's report, looking to how well it predicts the report of a later buyer. Honest reporting proves to be a Nash Equilibrium. To balance the budget, the incentive payment to each buyer is charged to someone other than the one whose report that buyer is asked to predict. In addition, payment schemes can be scaled to induce appropriate effort by raters.
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