Title

Lemons on the web: A signalling approach to the problem of trust in Internet commerce

Date of this Version

10-1-2005

Document Type

Journal Article

Publication Details

Interim status: Citation only.

Lee, B-C., Ang, L. & Dubelaar, C. (2005). Lemons on the web: A signalling approach to the problem of trust in Internet commerce. Journal of economic psychology, 26(5), 607-623.

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© Copyright Elsevier B.V., 2005.

Abstract

Asymmetric information is at the heart of situations involving trust. In the case of B2C Internet commerce, the information asymmetry typically relates to the difficulty that consumers have of distinguishing between “trustworthy” and “untrustworthy” Web merchants. The impasse can be resolved by the use of signals by trustworthy Web merchants to differentiate themselves from untrustworthy ones. Using an experimental design where subjects are exposed to a series of purchase choices, we investigate three possible signals, an unconditional money-back guarantee, branding, and privacy statement, and test their efficacy. Our empirical results confirm the predictions suggested by signalling theory.

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This document has been peer reviewed.