User-Generated Ratings and the Evaluation of Credibility and Product Quality in Ecommerce Transactions Andrew J. Flanagin Miriam J. Metzger Rebekah Pure Alex Markov Department of Communication, University of California, Santa Barbara Santa Barbara, CA 93106 flanagin@comm.ucsb.edu , metzger@comm.ucsb.edu , rebekah.pure@gmail.com , markov@umail.ucsb.edu Abstract Although extremely popular, electronic commerce transactions often lack information that has traditionally served to ensure trust and credibility among exchange partners. The capacity of digital media to aggregate information and connect individuals to one another, however, offers new potential for determining information quality and credibility. To understand people’s perceptions of the credibility of commercial web site information and the factors they find important in their evaluative processes, a nationally representative survey and quasi-experiment were conducted. Survey results showed that while people engage in ecommerce regularly, they do not contribute consumer-generated information very often. They do, however, rely heavily on ratings to evaluate the credibility of commercial information they find online Experimental results further indicate that people attend to aggregate product ratings, but not to the number of ratings when evaluating the quality of products sold online. We conclude with implications of these findings for system designers. 1. The Prevalence and Risk of Online Commercial Transactions People are increasingly relying on web-based commercial information for electronic commerce (“ecommerce”) transactions that range from small personal items to home purchases [1]. Retail ecommerce sales in the U.S. currently constitute roughly four percent of total retail sales, which translates to almost 40 billion dollars annually [2]. Indeed, the number of Americans who have purchased a product online has steadily increased since 2000, and a majority (66%) now report having made at least one online purchase [3]. An even larger percentage (93%) has used the Internet for ecommerce-related activities, including researching information about a product they are thinking of buying, with more than a quarter of Americans reporting they do this on a daily basis [3]. In fact, over the last decade the number of people either researching or buying a product or service online has nearly doubled, a trend that holds true across a wide range of ecommerce-related activities [1]. Given this level of online commercial activity, it is important to understand people’s perceptions of the credibility of commercial web site information and the factors they find important in their evaluative processes. This is particularly critical given that, despite its popularity, online commercial transactions often lack elements that have traditionally served to ensure trust and credibility among parties. As Hawes and Lumpkin [4] note, different levels of risk accompany various “patronage modes,” with risk increasing as the consumer is separated from the physical presence of the retail store. Indeed, information asymmetries between buyers and sellers, privacy concerns, system security shortcomings, immature legal protection mechanisms, low investment in infrastructure, the inability to sufficiently inspect goods prior to purchase, and fraud are among the many risks faced by online consumers today [5-7]. Research has shown that risk may be reduced by relevant commodity information [8-10], through vicarious experience that may serve as the basis of personal trust [11], and from system or structural features that serve to bolster trust in parties by means of external assurances [11, 12]. In addition, Bailey et al. [12], note that feedback profiles, achievement awards and other information about sellers, third- party payment options and insurance, and product Proceedings of the 44th Hawaii International Conference on System Sciences - 2011 1 1530-1605/11 $26.00 © 2011 IEEE