Five stars: A study on the effect of seller’s reputation controlled for buyer loyalty on online drug markets
Summary
The aim of this paper was to investigate the question what role a seller’s reputation plays in the decision of buyers to trust this seller and therefore in facilitating cooperation on online drug cryptomarkets, while controlling for buyer loyalty. Earlier research found that having a high reputation as a seller increased the number of sales (Hardy & Norgaard, 2016; Przepiorka, Norbutas, & Corten, 2017), but also that buyers often buy from the same seller multiple times (Décary-Hétu & Quessy-Doré, 2017; Norbutas, 2018), which could have led to an overestimation of the positive effects of reputation in these studies. This paper therefore re-examined the effect of reputation on the number of sales of a seller, while also looking at the number of unique buyers, to control for buyer loyalty, by conducting linear mixed model regressions on data from a cryptomarket named Abraxas. The results show that a higher weekly average rating of a seller significantly increased the number of sales of a seller and his number of unique buyers. The conclusion of this paper is therefore that reputation plays an important role in the decision of buyers to trust a seller, but that buyer behaviour is a relevant, non-negligible factor in this mechanism, which should be looked into in future studies.