Title
The economics and psychology of consumer trust in intermediaries in electronic markets: The EM-Trust Framework
Document Type
Article
Publication Date
1-1-2008
Abstract
The rise of electronic markets (EM) and e-commerce came with the promise of disintermediation. Yet, from aggregators to authenticators, the online landscape today is scattered with intermediaries such as EBay and Verisign, aiming to streamline e-commerce transactions and building consumer trust in EM. The central theme of this paper is to understand the contextual factors that lead to consumers need to trust intermediaries. In developing our arguments, the paper synthesizes perspectives from information economics, transaction cost economics, and literature on institution-based trust to develop the EM-Trust Framework. Drawing from information economics, the paper contends that EM embody certain inefficiencies, which in turn contribute towards heightening consumer uncertainty, especially under conditions of high information specificity. Heightened consumer uncertainty subsequently reduces consumer trust in EM. It is only in the face of uncertainty and a loss of trust in EM that consumers transfer their need to trust in intermediaries. However, the transference of trust is complete only if agency costs from intermediation lie within consumer thresholds. A mini-case of online mortgage marketplaces is used to illustrate the EM-Trust Framework, thus creating threads for more insightful investigations in the future. © 2008 Operational Research Society Ltd. All rights reserved.
Recommended Citation
Datta, P., & Chatterjee, S. (2008). The economics and psychology of consumer trust in intermediaries in electronic markets: The EM-Trust Framework. Retrieved from https://digitalcommons.pvamu.edu/computer-information-facpubs/34