Click to Judge

I recently contributed an essay to the always-excellent Literary Review of Canada, which is out in the April issue and is one of the contributions that they have put online so you can read it in its entirety for free here, you lucky people. It's a review of an essay collection called "The Reputation Society", edited by Hassan Massum and Mark Tovey. Unfortunately I didn't like the book much. The concluding paragraph of my review is this:

There is a need for inventive and serious thought about the issues of reputation and trust in an increasingly digital world. Our social and commercial interactions will be increasingly mediated by large-scale software systems, and we need ideas about how best to design, navigate and regulate these systems. Unfortunately, by avoiding real-world cases and thorny problems, The Reputation Society provides no answers.

My starting point for the review, although it's not explicit in the essay, is that information asymmetry is at the heart of anything to do with trust, reputation, and the market; and despite what some optimists claim, sheer volume of opinions does not solve the problem. Recently, I even deleted this paragraph from the Wikipedia article on Information Asymmetry:

Although information asymmetry has recently been noted to be on the decline with the rise of the internet, which allows ignorant users to acquire hitherto unavailable information such as the costs of competing insurance policies, or the price of used cars, it is still heavily applied to human resource and personnel economics regarding incentive schemes when the employer cannot continually observe worker effort.

"The costs of competing insurance policies, or the price of used cars" has nothing to do with information asymmetry. The question is, how do you know if I'm telling the truth, when I have an incentive to distort it? How can we establish trust?

Wikipedia itself provides a useful case study. For many topics there is little incentive for a contributor to provide false information beyond the thrill of vandalism, and the fact that such vandalism can be undone with a single click means that trust is not a significant issue throughout many parts of the encyclopedia. Why would anyone lie about the birth date of Henry III of Castile being 4 October 1379? As a result, "anyone can edit" applies and the encyclopedia has become the phenomenon it is.

There is a small number of pages (several thousand of the 3.3 million in English Wikipedia, or 0.1%) that are the subject of repeated edit wars, and which "are semi-protected to reduce the risk of inappropriate editing". The policies and practices around these pages have undergone continual revision (Seth Finkelstein will know more) and the costs of maintaining neutrality are high; one way or another, when there is a conflict of interest, it needs special treatment.

When it comes to reputation, there's always a conflict of interest. A hotel has an interest in promoting its own image, and in worsening the image of its competitors. Simply throwing open the floodgates doesn't resolve this basic problem, and the paragraphs on TripAdvisor at LRC explain why. (That said, I have no doubt my cousin's place Riad Africa, in Marrakesh, is indeed a wonderful place to stay).

On the web, as elsewhere, there will be many ways explored to solve the proble of trust. Angie's List takes an approach that is almost the opposite of TripAdvisor in its reviews of contractors and services: it requires membership, and all reviews are checked by a human. A result is that, success or not, Angie's List is run much more like non-web reputation services: restaurant review guides, holiday home guides, and so on. If the main benefits of the web are free-for-all Wikipedia-style contributions, then it remains to be seen how reliable it can be for issues like reputation, where conflict of interest and asymmetric information are the sticking points. 

 

Comments

[RAD]

Once again, Tom, you have sent me down a rabbit hole I had no intention of exploring. I've never used TripAdvisor before. For the type of travel I do that is focused on underwater and nature photography, the hotel rating systems are generally useless or in the best case they may be a reverse relationship between what is deserving of five stars for me and what is generally rated as five stars. So I tried TripAdvisor and searched for my favorite Indonesian Dive Resort, Kungkungan Bay Resort:

http://www.tripadvisor.com/Hotel_Review-g680020-d555425-Reviews-Kungkungan_Bay_Resort-Bitung_North_Sulawesi_Sulawesi.html

The site and the review of this specific resort are fascinating. From an asymmetric information point of view, what is interesting is how much useful information can be gleaned from the reviews despite the lack of information on what makes this place magical. There is also a total absence of reviews by people who believe Kungkungan is equivalent to hanging out with unicorns in their natural habitat.

What surprised me most is that I found some parts of TripAdvisor extremely useful. For instance, the "What travelers are saying about this hotel" has three key things that apply: "muck diving", "Lembeh Strait", and "house reef". When I saw that I thought, "wow, that is fantastic". I also really liked that you could click through on the ratings bar graph and see all the reviews of say 1 star.

Reading the reviews, especially the reviews with low ratings, is extremely useful for two reasons: being aware of "gotchas" to look out for, and understanding the needs/preferences of the ideal customer. First, stories like "blue hair from the pool" are hilarious on many different levels. Divers don't tend to use or value the pool, maintaining an outdoor pool in a location that can have large downpours is complicated, and we take for granted the skill set required to keep a pool safe for swimming and its really hard for a resort like Kungkungan to hire people with the prerequisite skills.

Second, if you understand what the magic is about a place you can quickly understand what type of person would not notice or appreciate the magical parts. If you focus on the fact that some of the dive masters do not chat you up between dives you are probably missing the fact that these individuals are ranked/judged by their ability to find critters. The ranking is not superficial. The best guides are in high demand. You can hire them for your own exclusive use and the same is true of the best boats. They can make massive amounts of money on tips. If you desperately want a magazine-cover-quality photograph of a mimic octopus, you are going to make it known to everyone that has influence about your goals and you will try to find out what guide(s) are mimic octopus superstars and who you have to pay to make it happen.

If you write a bad review about polar bear watching or swimming with beluga whales in Churchill, Manitoba saying that the weather was too cold you are missing the point. If you write a bad review of a highland gorilla trip in Rawanda and complain about the bumpy roads you are missing the point.

Reputation, incentives, influence, and context. The interesting thing is how much information is not shared. The mimic octopus superstar probably learned the location and range of specific animals and the signs that help them spot them. A dive master will benefit handsomely if they do not share that knowledge with other dive masters. An underwater photographer that is looking to sell their photos will probably not play nice with other photographers when it comes to sharing access to a rare animal.

Finally, divers that consider Kungkungan the gateway to an underwater magic unicorn-land probably want to keep it a hidden secret shared among an elite few. Its underwater inside baseball.