Abstract

Market transactions are subject to information asymmetry about the delivered value proposition, causing transaction costs and adverse market effects among buyers and sellers. Information systems research has investigated how review systems can reduce information asymmetry in business-to-consumer markets. However, these systems cannot be readily applied to business-to-business markets, are vulnerable to manipulation, and suffer from conceptual weak spots since they use textual data or star ratings. Building on design science research, we conceptualize a new class of reputation systems based on monetary-based payments as quantitative ratings for each transaction stored on a blockchain. Using cryptography, we show that our system assures content confidentiality so that buyers can share and sell their ratings selectively, establishing a reputation ecosystem. Our prescriptive insights advance the design of reputation systems and offer new paths to understanding the antecedents, dynamics, and consequences to reduce information asymmetry in B2B transactions.

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