The Reputation Economy

Playing the Trust Game Successfully in the Reputation Economy

Giana M. Eckhardt


Digital Marketing, Reputation, Trust, Ratings, Sharing Economy

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The age of reputation
Reputation has always been important for organizations. With the rise of digital business models and sharing platforms, however, having no reputation has become almost worse than having a bad reputation. Hunting for “stars”, the icons of the reputation economy, is a prerequisite for survival in e-commerce in general and on sharing platforms in particular. As such, understanding how reputations are formed, how they are used, and why they are so important has become a paramount concern in marketing departments and C-suites around the globe. In contrast to the dystopian sci-fi world in Charlie Brooker’s Black Mirror story, “Nosedive” (see Box 1), there is still a life without ratings, but hardly anyone or any organization can avoid the need to build their reputation solidly by means of ratings and rankings.


Why reputation has become the new key asset
The key to understanding the rise of reputation is trust. When people interact with others they do not know, and in particular, when they engage in economic exchange, whether it is with an organization or a peer, if and how to trust the other party becomes a paramount concern[CK1] . A guest may not have ever met the Airbnb host whose home they will sleep in, but their confidence in the Airbnb platform, via reputation management practices, allows them to sleep comfortably. The ability for a platform to provide this trust has become crucial in the past decade, as more economic activity takes place digitally, and peer-to-peer exchange has come to the fore with the rise of the sharing economy.

Trust can be thought of as a confident relationship with the unknown (Figure 1). However, building a sense of confidence in the unknown is not as easy as it might seem. For organizations, managing online reputations is a full-time job, as this is the space where trust will be accrued – with partners, consumers, communities, and stakeholders. Having a digital reputation is the key to success in today’s marketplace. It has become a valuable intangible asset to organizations, similar to how significant brands are. In his article in this issue, Gandini discusses the role of reputation more deeply and points out that reputation work is becoming more professionalized. That is, social media managers are now key players in marketing departments, whereas they didn’t exist ten years ago, and one of their most important jobs is the careful curation of digital reputation.


Key issues and challenges of reputation management
Marketers need to engage in diverse forms of reputation management and master several challenges in designing the right systems and utilizing reputation information in optimal ways (see Figure 2).

  • The interdependence of platform and user reputation
    On digital platforms, one of the key issues in the reputation economy is managing the reputation of the platform versus the reputation of the user or consumer within the system. This is a complex issue. If one trusts a platform like Uber, will one trust the individual driver in whose car they are riding? While there are typically ratings of individual drivers to address this, these tend to have large positive bias, so the star ratings are not a straightforward indicator of the trustworthiness of the driver; there must be trust in the platform as well. In the digital space, how people interpret trust indicators depends on several factors (see Figure 3). The individuals who are providing the service via the platforms, like the Uber driver or Airbnb host, contribute directly to how much the platform, overall, is trusted. Yet, because they are not employees, it is much more difficult for organizations to ensure consistent and on-brand practices.


  • Unverified and fake reviews
    All trust-building efforts are endangered if reviews are faked. In fact, one out of seven reviews on Tripadvisor and as much as 60% of Amazon reviews are estimated to be fake; almost all articles in this issue discuss possible strategies to take against fake reviews. Reputation platforms, such as Tripadvisor, have begun to review comments before they are posted publicly, since there has been a strong backlash against the plethora of fake reviews that appear on the site. Also, blockchain is a technology that many hope can revolutionize reputation management, as it can eliminate fake reviews and ratings, including those from click farms and bots. Yet, although blockchain has been in use for a few years now, we have not yet seen these issues disappear.
  • Positivity bias and reputation inflation
    Another reason why using ratings as proxies for digital reputation is problematic is that overly positive reviews have a tendency to get even more positive over time, which is the phenomenon of reputation inflation. Averages of star ratings tend to be around 4.5, and with this positive skew, the signal sent by the rating becomes harder to interpret. Strategies to address these challenges lie not only with the platforms themselves, but also with regulators as well as users and consumers on the platform, as Moehlmann and Tuebner explain in their article. Different participants in the ratings eco-system need to cooperate to increase the overall efficacy of rating systems.
  • Reviewer bias and reviewer skills
    Even without fake and overly positive reviews, the picture delivered by reviews and ratings does not represent a complete picture of all experiences. In their article, Maffael and Gottschalk remind us that digital consumer reviews are written by a small percentage of consumers. Reviewers often post strategically, and what they write can be influenced by past reviews. In addition, not all types of experiences are shared equally. Dieckmann and Unfried point out that more emotionally arousing experiences – positive as well as negative – are more likely to be shared with others than more neutral ones. Further, van Laer demonstrates that reviews are not equally persuasive. The most persuasive reviews are the ones that relate an engaging narrative.


  • Discrimination
    A highly topical issue is the tendency toward discrimination on platforms. Even supposedly neutral algorithms, applied by Google and other platforms, have been shown to produce discriminating effects with regard to gender, age, ethnicity, and race. Luca and Svirsky conducted studies with Airbnb that demonstrated a bias on the part of hosts to accepting African Americans as guests. The design of rating systems has important implications for issues such as racial and ethnic bias. Based on the results of their studies, Airbnb engaged in design changes, such as allowing a person to book instantly rather than allowing the host to look at their picture or see their name before approving them, and was able to reduce discrimination. The key takeaway here is for organizations to measure discrimination within their reputation systems and the algorithms that run them, and withhold sensitive data, such as photos, until after the opportunity to act on biases has past. Testing and running analytics on design features are key to addressing systemic bias within platforms. With a global focus on how to reduce systemic racial bias, this is an important insight that can become part of a manager’s toolkit for addressing discrimination within an organization. The hopeful news is, as platforms become aware of this, they are open to modifying their design.
  • Platform design
    Platform design is crucial not only for ensuring non-discriminatory behavior or for limiting fake reviews. A smart design can also encourage more consumers to write reviews, contributing to a broader representation of experience. It can also facilitate narrative expression, facilitating more persuasive reviews. Platform design is a critical factor for two-sided reputation systems in which each party reviews the other (e.g., Uber drivers are rated by passengers and vice versa). Holtz and Fradkin investigate how simultaneous reviews and incentives for reviews can help deliver less biased ratings. Simultaneous reviews are when one person’s review cannot be read until the counterpart has posted their own review. The authors also recommend greater reliance on private feedback, which cannot be seen by the public, but can only be seen between the two parties themselves.


Giana M. Eckhardt, Professor of Marketing, Royal Holloway University of London, England

Further Reading

Belk, Russell; Eckhardt, Giana M.; & Bardhi Fleura (2019): Handbook of the Sharing Economy, Cheltenham: Edward Elgar.
Botsman, Rachel (2017): Who Can you Trust? How Technology Brought us Together, and How it could drive us apart, London: Penguin Press.
Zervas, G., Proserpio, D.; & Byers, J. W. (2017): “The rise of the sharing economy: Estimating the impact of Airbnb on the hotel industry”, Journal of marketing research, Vol. 54(5), 687-705.