EBAY WORKS

Considering the Prisoner’s Dilemma in this chapter, provide your own insight on how sites such as eBay “work” for most participants of this popular online auction site. Do they really work? Or is there too much risk?

Most people selling on eBay are people who are trying to get rid of old junk and just make a dollar. Those people buying on eBay are generally trying to get something cheap. This creates two goals. Selling something cheap does not make as much money and making more money requires that people pay a higher price. Here is a clear dilemma. In order for auction sites to work both parties must find an equal value for which they are willing to buy and sell their product for.
 Each party must also trust the other. As in the prisoner's dilemma, one must trust the other to get the best outcome for each. However the buyer could decide that the minimum bid is too high, the seller gets nothing and must hold onto the item and the buyer looses nothing or the seller drops the price and makes less money and the buyer get exactly what they wanted. On the other hand the buyer could be tricked into spending more for a product. The seller could have multiple screen names and up-bid their own product. They seller could also sell something that is less quality than what they may lead to believe.
Both of the previous situations can be avoided with trust. If there is a way to ensure trust the idea of eBay could be foolproof, as would the idea of stealing and crashing a car like in Shirky's chapter. Trust is a major part of buying and selling online. The site eBay attempts to improve trust between patrons of the site by providing areas that users can leave feedback for each other. EBay then compiles the feedback for other users to see. This allows buyers to rate the trustworthiness of a seller. This is enough for most users. They will select a seller with a higher satisfaction rating than one with a low rating.
Other users do not even look at this feedback and trust in the goodness of people or simply trust in the reputation of the site. If a large percent of customers lied cheated and stole to make more money less and less people would use the site to make purchases, but the site survives. The fact that eBay and other auction and bidding sites exists and continue to make money show that even with the framework of a prisoner's dilemma in place the sites still work. People are obviously still interested in using the tools provided and trust the other users as they hope they are trusted.
There are obvious risks involved with making purchases on eBay. There may even be too mush risk for those skeptical people. But over all the use of the auction site is too high for someone to believe that there is too much risk. EBay has built up a solid reputation and seems to have helped people stay within the boundaries of the win-win (or rather less loss-less loss) choice in the prisoners dilemma.