Abstract This study measures the value of website quality in terms of its impact
on trust, intention to transact and price premiums. Prior research on online auctions
has focused on the use of reputation systems for building trust in online auction vendors
and subsequently to generate price premiums. This study examines the extent
to which trust can be induced by improving the quality of online auction listings.
A survey of 701 eBay users is conducted which compares the price premiums of two
nearly identical online auction businesses, one that has online auction listings with
a perceived high quality and the other that has substantially lower perceived quality.
Results of this study indicate that website quality can explain 49% of the variation in
the trust for eBay sellers. In fact, it shows that sellers with good website quality are
all perceived to be equally trustworthy regardless of their eBay reputation; whereas
sellers with poor website quality are not perceived to be trustworthy even if they have
a high eBay reputation score. The results also show that the trust resulting from increased
website quality increases intention to transact and results in price premiums
of 12% (on average) for sellers with higher quality listings. Theories from marketing,
economics, and social psychology are used to explain why website quality induces
trust in unknown vendors without providing any concrete evidence regarding the vendor’s
past history.