Information Design in Consumer-to-Consumer (C2C) Marketplaces: The Roles of Anonymity and Product Quality Uncertainty

Abstract

Recently, there has been a notable increase in the prevalence of consumer-to-consumer (C2C) online marketplaces offering integration with social networks. Platforms such as eBay, Facebook Marketplace, Zhuanzhuan, and Poshmark have led such initiatives. In such marketplaces, the structure of social relationships revealed to platform participants can influence the choice of transacting partners as well as the terms of transactions. We study the role of different levels of information design policies on offers and acceptance decisions in a social commerce marketplace setting. We propose a novel information design policy, for C2C marketplaces, called partial anonymity in which the transacting parties are provided with limited social information about each other. Using a theoretical model and experimental data, we show that a partial-anonymity information design allows sellers to be more strategic than a social commerce marketplace with no anonymity. Further, with a partial-anonymity design, the likelihood of a successful transaction is higher than in a fully anonymous marketplace. Our results are robust to different product categories and uncertainty in product quality.