risk and performance
This page considers trust, risk and performance.
It covers -
Online and offline, consumers seek clues to assess whether
a retailer, government agency or individual is credible.
They also judge on the basis of performance.
That is not new, as evident from from accounts in Paco
Underhill's entertaining Why We Buy (London: Orion
1999), Perceived Quality: How Consumers View Stores
& Merchandise (Lexington: Lexington Books 1985)
edited by Jacob Jacoby & Jerry Olsonn and Trust
and Crime in the Information Society (Northampton:
Edward Elgar 2005) edited by Robin Mansell & Brian
Collins. As noted in the reputation page
of the marketing guide elsewhere on this site, many are
using the web to express their opinion of that performance.
This page highlights some of the studies of how consumers
assess sites and online services. It is an introduction
to questions explored more fully in separate guides on
marketing and the new economy.
Despite claims by some pundits, consumer behaviour online
is not monolithic. Although the web is becoming mainstream,
it's not surprising that different groups have different
expectations and seek different cues. That's a challenge
if you're offering goods and services online, as the market
segments you want to capture may be among the more savvy.
They're also likely to comparison shop, judging your services
or information against overseas benchmarks that are just
a mouse-click away. Such benchmarking is becoming an issue
as Australian markets ask why local retailers, for example,
do not match the privacy and feedback policies of overseas
We have been underwhelmed by the lack of response to queries
addressed to webmasters on several major Commonwealth
government sites: there seems little point of including
an email link if the mail is not checked. Claims by particular
agencies that their sites do not feature cookies are regrettably
Starting points for considering the nature of trust
in cyberspace are
detailed 1999 report
from the US National Academy of Sciences on Trust
Informed Consent Online project (ICO)
at Washington University
2001 Stanford Persuasive Technology Laboratory report
on factors that affect credibility
2002 report (PDF)
Pichler's 2000 thesis Trust and Reliance-Enforcement
and Compliance: Enhancing Consumer Confidence in the
Electronic Marketplace (PDF).
literature discussed elsewhere on this site we have pointed
to Trust & Risk In Internet Commerce (Cambridge:
MIT Press 2000) and The Economics of Information Security
(New York: Springer 2004) by L Jean Camp, Jason Rutter's
From the Sociology of Trust towards a Sociology of
and Bruce Schneier's excellent Secrets & Lies:
Digital Security In A Networked World (New York: Wiley
2000). Schneier is more nuanced than Gail Grant's
Understanding Digital Signatures: Establishing Trust
over the Internet & Other Networks (New York:
There is a more technical approach in Joseph Reagle's
on Trust in a Cryptographic Economy & Digital Security
Deposits: Protocols and Policies. It is of particular
interest given Reagle's subsequent work with Cranor and
others on consumer responses to privacy policies and H
Jeff Smith's Managing Privacy: Information Technology
& Corporate America (Chapel Hill: Uni of North
Carolina Press 1995), for which as yet there is no equivalent.
A popular philosophy treatment is provided in Trust:
From Socrates to Spin (London: Icon 2004) by Kieron
O'Hara, author of Plato & the Internet (London:
For those seeking a mathematical approach we recommend
Sandeep Krishnamurthy's 2001 paper
An Empirical Study of the Causal Antecedents of Customer
Confidence in E-Tailers and From Surfing to Buying:
The Role of Online Customer Experience in Acquiring and
Converting Web Traffic (PDF)
by Shivaram Rajgopal, Suresh Kotha & Mohan Venkatachalam.
Our discussion of trustmarks is here;
a more detailed discussion of privacy web seals and offline
trustmarks is provided here
in our detailed Privacy guide. The Design guide features
suggestions about online
indicators of credibility
In the late 1990s some advocates hailed the development
of shop bots as a tool for getting the best price by searching
across numerous sites.
Typically bots spider prices identified on B2C and B2B
sites, collate the results and display a listing that
allows an end-user to quickly compare prices for a particular
item or for similar items. Rather than laboriously having
to find etail sites and then identify prices on those
sites one by one, the information is automatically gathered
We were somewhat more reserved, since great pricing is
one thing, actual delivery (and if appropriate return)
Other advocates promoted rating systems, of varying complexity,
so that consumers could advise each other independent
of a vendor's advertising or a self-awarded seal.
In practice the performance of such schemes has proved
to be quite problematical. There have been claims that
particular retailers cook the books in a digital version
of payola. Some have used software or litigation to prevent
bots trawling their site. Others, such as Amazon, rely
increasingly on dynamic pricing - potentially a different
figure for every visitor.
Chris Dellarocas' 2000 paper (PDF)
Immunizing online reputation reporting systems against
unfair ratings and discriminatory behavior and the
by Erik Brynjolfsson on The Great Equalizer? Consumer
Choice at Internet Shopbots are thus of particular
Jakob Nielsen's 1998 Alertbox
on Reputation Management is an excellent introduction
to issues raised by the growing number of 'opinion' sites,
such as the US Epinions
and UK DooYoo
- web databases of complaints about hundreds of products
and services with authors receiving a royalty each time
a published complaint is accessed.
Complaints portal Ecomplaints
perhaps unsurprisingly has had limited success as a venue
for consumers to publicly swap messages with corporate
a site identifying the executives of all major US corporations,
appears to enjoy greater popularity.
The Information Economy guide
elsewhere on this site points to studies of what people
buy on the web and who is buying. Interpreting that information
is a challenge, as there is a significant regional variation
within markets such as the US and between markets such
as the UK and Australia.
One example is the report
by the London Business School on Business to Consumer
eCommerce: an Investigation of Factors Related to Consumer
Adoption of the Internet as a Purchase Channel.