Dan Herman Research

We’re all familiar with the concrept of reputation and how in a world of social networks, voting and rank, it’s becoming increasingly important.

That’s not, however, to say that it’s a new concept. Information asymmetry in commerce is a centuries old problem. Solving it through reputation is equally ancient. We may associate eBay with our modern definition of online reputation but the concept is perhaps earliest associated by archival records of trading between Maghribi merchants in the 11the century. Research on these early economic transactions show that the key to curtailing “opportunistic behaviour and promoting trust between agents” in an environment of high information asymmetry was a system of reputations that was developed and shared between the agents within a trading coalition or network.

Like on eBay, success for the seller rested upon the fear of exclusion from the trading network – thus promoting honest behaviour and fair trading amongst Maghribi merchants.

Fast forward to today and we’re all aware of the use of rankings and feedbacks to vet the quality of a buyer or seller on eBay, or rank the quality of submissions from participants in communities like Wikipedia, Sermo or World of Warcraft.

But can we take this concept of applying cheap and available reputation information to offset quality and reliability problems in Government? (more…)