Repeat Buying Behavior of Illegal Drugs on Cryptomarkets
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The goal of this research is to get a better understanding of buyer behavior on cryptomarkets, and to what extent buyers buy repeatedly from sellers. Cryptomarkets are anonymized markets only accessible through encryption software such as Tor. These markets provide opportunity for people to trade in illegal goods such as drugs in relative safety from legal authorities. Trading on cryptomarkets relies on trust and reputation. Theory from The Trust Game is used to explain the relations between buyers and sellers, as well as the actions that the actors can make. Although sellers have high short-term incentives to scam their customers, long-term success relies on trustworthy behavior. Buyers have to make risk assessments to place trust based on available information and experience. Data was gathered from the AlphaBay cryptomarket shortly before it was taken down by U.S. authorities. Logistic regressions were used to analyze the odds of buyers repurchasing after each purchase both on network level as well as on dyad level. 69.4% of the buyers on AlphaBay bought repeatedly, and 32.5% of all dyads were repeated. It was found that positive experiences give better odds of buyers making more purchases on network and dyad level. Using safe payments services such as escrow and experience also increase odds of buyers repeatedly purchasing. Future quantitative research on buyer behavior may want to focus on availability of alternative products and sellers for buyers, qualitative research may be valuable for finding buyer motivations to keep purchasing, stop purchasing or change sellers.