Previous online reputation research has been focused on the effects of positive and negative reputations on trust formation, trading price, and probability of sale. We propose that negative feedback rate (NFR) is the most important indicator of the risk of buying from a seller online. This proposition has been supported by an empirical study based on data collected from eBay.com. We found that the 6-month NFR in the current period predicts much better the future risk measured by the NFR in the next 6-month period than did net reputation score and negative reputation score. A seller’s life-long negative score in fact was not significant in predicting the future risk. In addition, a seller’s age in the market was found to have similar predicting power on risk as did net reputation score.
Li, Dahui and Lin, Zhangxi, "Negative Reputation Rate as the Signal of Risk in Online Consumer-to-Consumer Transactions" (2004). ICEB 2004 Proceedings. 163.