Independent Study Report on Reputation Systems

Transactions over the Internet with unknown users is a risky business. In today’s world of e-commerce relying just on the past historical transactional data or feedback does not entirely determine a player’s trustworthiness. Various other factors like – the trustworthiness of players who have given feedback; the kind of goods and amount involved in the transaction; the reputation of the player who gives feedback and one who receives feedback should ideally determine the extent to which the “feedback” given can damage or enhance the player’s reputation. In this report I make an attempt to list down few incentives and heuristics which in theory should motivate a player to play honestly. Further, make dishonest players pay heavy penalty (in the form of decreasing their rating). The incentives are mainly economic – higher reputation favors better and more transactions.