Effect of e-commerce sellers evaluation on consumers perceived trust-case of taobao.com

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1 Available olie Joural of Chemical ad Pharmaceutical Research, 204, 6(7): Research Article ISSN : CODEN(USA) : JCPRC5 Effect of ecommerce sellers evaluatio o cosumers erceived trustcase of taobao.com Gua Hogju,2 ad Zhao Aiwu 3* Cetral Uiversity of Fiace ad Ecoomic, Beijig, Chia 2 Shadog Uiversity of Fiace ad Ecoomic, Jia, Chia 3 Jiagsu uiversity, Zhejiag, Chia ABSTRACT Perceived trust is oe of the most imortat rerequisites for cosumers to make tradig decisios. Taobao.com rovides a evaluatio system for sellers to judge a seller s degree of trust i terms of its historical trasactio. However, accordig to rosect theory, cosumers judgmet was wared i some cases. Takig the evaluatio system of taobao.com i Chia as a examle, it aalyzed decisio makers' sychological activities whe they facig ositive ad egative evaluatios. Meawhile, I order to quatitatively evaluate cosumers erceived trust, it recalculated cosumers erceived robability about sellers ositive evaluatio ad egative evaluatio based o rosect theory. The result shows, cosumers erceived egative evaluatios are ot the same as the egative evaluatios listed o website. I fact, cosumers usually overstate sellers egative evaluatio, ad adjust their erceived trust. Ecommerce sellers should be vigilat eve if their egative evaluatio robability were quite low. Key words: Perceived trust, evaluatio, ecommerce, rosect theory INTRODUCTION Trust is the life of busiesses, cosumers wo t trade with sellers lack of trust. Comared with traditioal busiess, both arties i ecommerce usually do t commuicate face to face. Cosiderig o "seeig is believig", as limited ratioal cosumers, they have may worries about such ever meetig trasactios. At the same time, the iformatio of ecommerce trasactio is asymmetry or eve missig, buyers ofte make their cogitive ad judgmet justdeed o their exeriece ad ituitio, the recommedatio of frieds, olie commuicatio, ad so o.all of these affect cosumers cofidece i olie trasactios. Such lack of erceived trust is the biggest obstacle to ecommerce trasactios(hoffma et al.999[], Pavlou et al. 2007[2]). I fact, erceived trust is oe of the most imortat rerequisites for cosumers to make tradig decisios(gefe et al. 2003[3], Pavlou ad Gefe 2004[4]).For the rotectio of ersoal rivacy ad security cosideratios, eve if the rice is lower tha traditioal market, cosumers will ot trade with their distrust olie sellers. Taobao.com iveted evaluatio system based o their real tradig history i 2003, ad it has greatly romoted the develomet of the trasactio of Chia's C2C ecommerce[5]. The mai fuctio of this system is coveiet for buyers to judge sellers' degree of trust i terms of their cumulative evaluatio based o historical trasactios ad form their ow erceived trust about each seller. Cosumers ca make their decisios based o their ow trust judgmet. The system curretly has become the actual stadard of etwork retail idustry i Chia. May ecommerce latforms use such mechaism, such as ebay, PaiPai, ad so o. Through the evaluatio system, cosumers ca clearly kow the robability of each occurrece of sellers trust ratig, ad judge their trust robability of future trasactios accordig to their historical cumulative robability. However, as risk tradig decisio makers, cosumers sychological feelig is differet whe they facig ositive evaluatio ad egative evaluatio. I order by reveal the real effect of ecommerce sellers evaluatio o cosumers erceived trust, we first aalyzed cosumers sychological activities ad their behavior characteristics. The, thakig for rosect 695

2 Gua Hogju ad Zhao Aiwu J. Chem. Pharm. Res., 204, 6(7): theory[67], we recalculated the erceived robabilities about the ositive ad egative evaluatio. At last,we described the actual imact of ecommerce sellers accumulated trust ratig o the cosumer's erceived trust. THEORY AND METHOD OF PERCEIVED PROBABILITIES OF TRUST EVALUATION We assumed that the evaluatio level are divided ito grades, ad level,2,..., h( h ) are ositive evaluatios, while level h, h2,..., are egative evaluatios.the historical cumulative robability of each ( j,2,..., N ) evaluatio level is j =.Accordig to the idea of rosect theory, the real judgmet of the robability of some evaluatio levels are ot equal to the statistic data. Decisio makers usually adjust the statistic data ad relace them with their erceived data. So, accordig to rosect theory, the erceivedweight of each evaluatio levels are recalculated as follows: Sort, 2,... from big to small, we geta set of... 0 h h. Obviously, if j h, the j 0,else j 0. Accordig to rosect theory, the erceived robability of evaluatio level j is: j j ω i ω i= i= j ω i ω i= j i= j ( ) ( ), j =,2,... h π = ( ) ( i ), j = h, h 2,... ω ( ) ω ( ) I formula(), fuctio ad ω ( ) ω ( ) evaluatio. Accordig to referece[6,7], fuctio ad i are oliear weight fuctio for ositive evaluatio ad egative ca be exressed as: () ω ( ) = ω ( ) = x δ x ( ) δ ( ) / x / δ (2) (22) I above formula, x =0.6, δ =0.69. We further ormalize each erceived evaluatio level above, that is robability of each evaluatio level. j= j=, the we get the stadard erceived π = π / π j j i i= (3) ANALYSIS OFCHANGING OF PERCEIVED PROBABILITY ACCORDING TO STATISTIC PROBABILITY From formula(2), we ca calculate cosumers erceived robability accordig to the existet statistic robability. I order to comare the chagig tred of erceived robability accordig to statistic robability, we assumed that there are oly two umerical statistic robabilities. That is, we sum all of the ositive evaluatio levels to a ositive evaluatio robability, ad all of the egative evaluatio levels to a egative evaluatio robability, the we have: h = j= j (4) = j = h j. (42) 696

3 Gua Hogju ad Zhao Aiwu J. Chem. Pharm. Res., 204, 6(7): The erceived robability of ositive evaluatio ad egative evaluatio are: π = /0.6 ( ) /0.69 ( ) π = π = π / ( π π ) π = π / ( π π ) (53) (54) (5) (52) Now, π% is the erceived robability of ositive evaluatio, ad π% is the erceived robability of egative evaluatio. To aalyze the tred of erceived robabilities, first of all, we calculate the derivatives of formula (5) ad formula(52). The results are: = 0.6 ( ).64 ( ) = 0.69 ( ).45 ( ) (6) (62) Usig formula(6) ad formula(62), we ca calculate the chagig tred of erceived robabilities accordig to the ositive robabilities chagig from 0% to 90%. Because of the erceived robability is ot related to ositive evaluatio, but also related to egative evaluatio, whe the ositive evaluatio chages from 0% to 90%, the egative evaluatio chages from 90% to 0% accordigly, as listed i table. Statistic ositive evaluatio robability Tab.: Chagig of ositive erceived robability accordig to statistic robability Chagig rate of erceived robability accordig to statistic robability Effect of ositive evaluatio Effect of egative evaluatio Chagig tred of erceived ositive evaluatio From table, we foud that whe the statistic robability of ositive evaluatio is low, the effect of ositive evaluatio is overstated. O the other had, whe the statistic robability of ositive evaluatio is high, it is uderstated comared with the origial statistic robability. Because egative evaluatio equals to ositive evaluatio, it is the chagig tred of erceived egative robability from bottom to to i the above table. That is, whe the statistic egative robability is low, its erceived egative robability is overstated, ad the same reaso, the erceived egative robability is uderstated whe the statistic data is high. Whe the statistic robability equals to 0.45 or so, the erceived robability is almost equals to the statistic robability. Meawhile, we ca foud from table that the overstatig effect of egative evaluatio is more sigificat tha ositive evaluatio. This exlaied the heomeo that whe facig egative evaluatio, cosumers feel worse tha what the statistic data meas. This is eve more obvious whe the egative evaluatio robability is quite low. We ca clearly observe the chagig tred of erceived robability from fig. 697

4 Gua Hogju ad Zhao Aiwu J. Chem. Pharm. Res., 204, 6(7): Positive evaluatio Negative evaluatio Fig.: Perceived robability chagig tred accordig to statistic robability EXAMPLE AND ANALYSIS There are four levels of evaluatio i Taobao.comexcellet, fie, medium ad bad. We assume that excellet ad fie are ositive evaluatio, ad medium ad bad are egative evaluatio. The statistic trust evaluatio robabilities of oe seller are 70%, 20%, 9% ad %. The, accordig to the idea described above, the actual erceived robabilities ad statistic robabilities list i table 2 ad figure 2. Tab.2: Perceived robabilities ad statistic robabilities of each trust evaluatio level Level Trust evaluatio Statistic robability Perceived robabitlity Overstatig rate of erceived robability Excellet 70% 72.99% 4.27% 2 Fie 20% 0.56% 47.9% 3 Medium 9% 2.97% 44.5% 4 Bad % 3.47% % 80% 70% 60% 50% 40% 30% 20% Statistic robability Perceived robabitlity 0% 0% Excellet Fie Medium Bad Fig.2: Comarig curves of statistic robabilities ad erceived robabilities Table 2 ad figure 2 clearly showed tha the erceived robability of egative evaluatio is overstated, esecially for the worst egative evaluatio of bad, the erceived robability is 3.47 times the origial statistic robability, ad overstated by %. It meas that from the actual sychological feelig, the effect of egative evaluatio is overstated by times. 698

5 Gua Hogju ad Zhao Aiwu J. Chem. Pharm. Res., 204, 6(7): CONCLUSION Perceived trust evaluatio is the quatificatio for cosumers to exress their real feelig about sellers trust level. Because of the limited ratioality of cosumers, they ofte overstate sellers egative evaluatio robabilities. This oit was also verified i the actual study. Because of asymmetric iformatio ad the lack ofcommuicatio with each other face to face, ew cosumers always overstate ad distort the egative evaluatiosof historical trasactios. This ut forward higher requiremets for ecommerce oerators, ad asks sellers ay more attetio o the details of marketig ad cosumers exerieces. It is the key for sustaied ad healthy develomet of ebusiess eterrises. Ackowledgmets This work is suorted by atioal atural sciece foudatio of chia( ,77099),doctoral Program Foudatio of Istitutios of Higher Educatio of Chia( ),Fud of Miistry of educatio of Humaities ad Social Scieces(4YJAZH025),Chia Postdoctoral Sciece Foudatio(203M530862, 204M55525),Natural Sciece Foudatio of Shadog Provice 203ZRB0432),Jiagsu ostdoctoral research grats rogram(302056c).the authors are grateful to the aoymousreferee for a careful checkig of the details ad forhelful commets that imroved this aer. REFERENCES [] Hoffma, D. L., Novak, T. P., ad Peralta, M. Commuicatios of the ACM.999,42, 4, [2] Pavlou, P. A., Liag, H. G., ad Xue, Y. J. MIS Quarterly.2007,3,, [3] Gefe, D., Karahaa, E., ad Straub, D. W. MIS Quarterly.2003,27,, [4] Pavlou, P. A., ad Gefe, D. Iformatio Systems Research.2004,5,, [5] SuJu, Hu Xiaoxue, Zhou laugh. Cosumer Ecoomy.200,26, 4, 586 [6] Kahema D, Tversky A. Ecoometrica.979,47, 2, [7] Tversky A, Kahema D. Joural of Risk ad Ucertaity.992,5, 4,