Testing the Application of Warranting Theory to Online Third Party Marketplaces: The Effects of Information Uniqueness and Product Type

Abstract

Online third party marketplaces link buyers and sellers by providing a neutral platform for exchange. However, this requires buyers to assess the quality of goods without being able to handle or sample them. Recent research has proposed extending the warranting principle, an emerging theory of online interpersonal impression formation, to the judgements consumer make about products online. The warranting principle holds that information that is more difficult to manufacture or manipulate, such as an individualized photo of an auction item, should be more informative to a consumers judgement of the product than information which is easy to falsify or manipulate. While this theoretical extension assumes that all online goods are capable of being assessed in the same way, some goods (i.e. experience goods) are more difficult to assess in online marketplaces because they must be experienced before their true quality and characteristics can be known. The current study examines 2,401 completed auctions from eBay revealing that the relationship between warranting cues and price discounts is moderated by the type of good being sold. The theoretical contributions and limitations of the study are discussed.