ABSTRACT
Platforms introduce immense opportunities for trade through reduced search costs and improved matching. However, for these possibilities to materialize, users must take the chance and participate in the platforms’ activities-they need to trust that they will be paid, receive high quality goods or services in return for their money, or that their information will not be used to their detriment. In this chapter, I review the literature from the abstract theory on trust to its implementation in the design of today’s most prominent platforms. I show that platforms rely on two broad categories of design strategies to facilitate the trust needed for them to be viable: (1) designing direct monitoring and enforcement mechanism that allows a user to trust the information on the platform regardless of the user’s trading partner, and (2) designing monitoring and communication protocols between users that allow for decentralized community enforcement. I argue that which of the categories a platform uses relies heavily on the attributes of the product or service traded on the platform, the ability of the platform to distinguish reliably between trustworthy and non-trustworthy user behavior, and the scope and scale of the community of users. More commonly than not, platforms employ a hybrid of the two categories. I conclude by discussing how concerns of privacy, safety, and discrimination are interrelated with trust in online platforms.
Fainmesser, Itay Perah, Marketplace Trust (September 6, 2024).
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