Reputation Systems

Question 1

Lemon Problem

Answer 1

Gresham’s law - In the long-term only lemons remain

Asymmetric information leads to adverse selection (lemons more likely to remain in the market)

Question 2

Market failure

Answer 2

Incentives lead to an undesirable outcome

Question 3

Moral Hazard

Answer 3

After the transaction
One party gets involved in a risky event knowing it is protected against the risk and the other party will incur the cost

Question 4

Terminology for reputation systems

Answer 4

No consensus in the scientific community

Question 5

Trust

Answer 5

Subjective probability which an individual A, believes another individual B will perform a given action upon which its welface depends

Question 6

Reputation

Answer 6

Collective opinion from multiple individuals about a single individual
Aggregation of personal experiences

Question 7

Reputation vs Recommender Systems

Answer 7

Recommendations are personalised/different for each user

Reputation is ideally an objective measure designed to address asymmetric information

Question 8

Calculating reputation value

Answer 8

Average ratings (corrected for user bias)
Weighted ratings
Maximum likelihood (probabilistic approach)

Question 9

Methods of weighting ratings

Answer 9

Weight individuals based on past ratings/trustworthiness (num ratings performed) / agreement of past ratings with population average
Weight ratings based on how old they are

Question 10

Measuring confidence in a rating

Answer 10

Number of ratings
Statistical tests (stdev, variance, p-vals)

Question 11

Precision

Answer 11

1/variance