Incentive-Compatible Trust Mechanisms

Jens Witkowski

Abstract: The most prominent way to establish trust in online markets such as eBay are reputation systems that publish buyer feedback about a seller’s past behavior. These systems, however, critically rely on assumptions that are rarely met in realworld marketplaces: first, it is assumed that there are no reporting costs and no benefits from lying so that buyers honestly report their private experiences. Second, it is assumed that every seller is long-lived, i.e. will continue to trade on the marketplace indefinitely and, third, it is assumed that sellers cannot whitewash, i.e. create new accounts once an old one is ran down. In my thesis, I address all of these assumptions and design incentive-compatible trust mechanisms with minimal common knowledge requirements.