Final Project- Reputation System

With the social and economical continuous development, especially the appearance of the internet economy, reputation system is becoming more and more important and it has influenced people’ behavior and habit of shopping. Trust is a complex, multifaceted, and context-dependent notion, which is representatively defined in Sloman [1] as “the quantified belief by a trustor with respect to the competence, honesty, security, and dependability of a trustee within a specific context”. At the same time, credit rating can also determine the success and failure of the business and individuals Because credit rating can be taken as the safe indicator of the business and individuals, when the credit rating frequently changes and drop, which means people have the reason to doubt that the company or person was something wrong, so the rating can also be seen as the alert for the potential consumers to caution them that the danger may exist in the list of the companies and persons of the lower credit ratings, which also contributes to strengthening the safety of the possible transactions.

Before the establishment of reputation system

 

The whole society actually lacked of reputation tools, which means people cannot transfer their good reputation accumulated by them in practical life to the specific object that can represent their honest level and can bring convenience to them. That means lacking of encouragement mechanism in that time further limited the development of reputation system. So the reality was that people tended to like exchange of goods for other goods without using money such as bartering rice for meat

Reputation agency was not be established. At that time, so called reputation agency can be taken as an individual who have close relation with the potential consumer, and by telling their best friends their shopping experiences, the person can promote the volume of transaction of the goods, which means it could influence the potential consumers’ behavior of shopping and transaction.

 

The high effective punishment mechanism of breaking the reputation did not appear. That means in the market of lacking of reputation supervision, people could exaggerate their level of reputation in order to get more profit, which actually undermines the reputation system and make people to lack of trust with each other, which in turn limit the further development of trade.

 

After establishment of reputation system

With the internet economy development, the reputation system is built to suit the modern business development. At the same time, reputation system in turn stimulates and creates the new model of businesses and push them to prosper and protect them from being misused, all of which make it possible to encourage consumers and merchants develop and accumulate their reputation ,because with higher reputation, people could enjoy more convenient life. As we all know, the way of online businesses are challenging that of the traditional businesses. How can online businesses can gradually get the leading position in the business world? I personally thinks, modern technique development creates the platform and give it the possibilities through the online to attract their aimed consumers, because of relatively lower price and convenience, online businesses actually have overthrown the way of traditionally doing businesses. But more importantly, if our society did not establish the good reputation system to supervise and monitor merchants and consumers’ reputation level, I do not think the online businesses would be prosperous as today. The reason is simple that people cannot decide which one they could trust to buy something without meeting them.

 

Reputation system must own three main functions as the support to promise the system can work relatively perfectly, which are trust, reputation scores and security.

 

In the past, the level of trust between people was relatively lower and people only believed what they had seen, so the commercial transaction can be seen as the adventure they had to face.

Also, reputation scores to something necessary they wanted to exchanged was just from their daily experiences and wording from closer people, which actually limited their chance to acquire more goods and also expose them to the situation of danger. Because empirical selection was hard to say it was safe and reliable without the guidance of standards.

 

Security at that time was not existing, because security was just established on how to reduce the chance of buying the wrong goods or being cheated. So lacking of the system of security as the promise further hinder social and economic development. Besides because of lacks of communication with consumers, people often refused to believe that their safe system was really safe as they said.

 

The shifts

Obviously, trust can be taken as the foundation of the reputation system and there are two kinds of definitions of trusts we will call reliability trust and decision trust respectively. About reliability trust, ［2］“ trust is the subjective probability by which an individual, A, expects that another individual, B, performs a given action on which its welfare depends ”.  Another one is decision trust, ［3］“ trust is the extent to which on party is willing to depend on something or somebody in a given situation with a feeling of relative security, even though negative consequences are possible”.

 

As we can see that reliability trust actually is based on the trust in people, however, the decision trust pays more attention to the something that can be considered as reliability.

Next, reputation scores makes trust in people and entity to become more reliable beyond your imagination, because it quantifies the level of reputation of people and entity in real commercial environment using the number. People can easily recognize which one it is relatively reliable than others, and the quantitative standards of reputation can also encourage and stimulate people and merchant’ behavior and reward the best by attracting more people shopping in the shop, and can get more good friends through online website, meanwhile to punish the people who own lower reputation scores and who cheat potential consumers by falsifying their reputation scores, which could become more and more important to check a person’ and a company’ credit rating and decide whether it is possible to allow them to do something by their reputation.

 

Security is always a problem that encourages or discourages consumers to try the new way of shopping. How to persuade consumers to believe that the system is safe actually needs the set of scientific negotiable ways. Firstly perspective-taking can be seen as the vital way. ［4］“perspective taking also enhances problem-solving abilities, including the ability to jointly solve problems at the bargaining table ” because the way can always consider the needs of consumers and try their best to fulfill their demands. So the production of security is what the consumers hope, they will feel respected and happy to try it. Next, in order to make the security products more close to potential consumers, ［5］“ Negotiators who ask the counterparty about their preferences are much more likely to reach integrative agreements then negotiators who do not as the other party about his or her priorities”, which means the way could integrate the consumers’ opinions with practical demands together and promote potential consumers to like it and accept it.

 

Tao bao is the most successful example of rebuilding the reputation system and make use of the set of reputation system accepted widely by people to create the reputation era of business and that the reputation system interacts perfectly with online businesses make the china quickly to get into the reputation society and until now reputation system has influenced every corner of realistic life of every citizen. But more important thing is that we need to think about how to change the habit of consumers from using cash face to face to using credit card on internet. So what we need to do is educate and persuade potential consumers to try the new and convenient way in their everyday life. ［6］“ effective persuaders have a strong and accurate sense of their audience’ emotional state, and they adjust the tone of their arguments accordingly”

We can take the tao bao as the example to reflect how the reputation system gradually change people’ consuming habits.

 

The shifts of way of shopping

Before electronic commerce appears, people used to go into shopping mall to select the goods they needed, and then they will pay money for it in person, during the which , consumers could feel safe and comfortable. But e-economy changes it totally. People could sit in front of computer to select what they love, and then use the credit card to pay for the merchant. The whole transaction do not need to leave home. It is very fast and convenient for people who are busy with daily work to have the time to enjoy the shopping. As long as you have the credit card.

 

The shifts of way of doing businesses 

With the continuous development of our society and economy, owning one’s own business was very hard for the most of people, because rent was higher beyond the common people’ affordability. But e-business can do it freely by the good individual reputation to do the business online, which can even earn much more than opening the shop on street. Besides higher reputation scores was given by customers in transaction, which can be taken as the promise of successful business. The reputation economy not only change the way of doing business, but encourage the establishment of social integrity.

How does the Tao Bao establish the business by developing the reputation system?

 

Firstly Trust was very precious resources before reputation system was built. At that time, people only chose to trust their relatives and friends and followed their instructions to pick up goods, which could help reduce the risks in practical transaction to some extent. What Tao Bao did was to help rebuild the reputation system by the set of relatively reliable mechanism, which suited the Chinese habits by establishing the third party to supervise the transaction and make sure the transaction was safe. If something was wrong, the third party would promise customers would not shoulder the risk, at the same time, businessmen would get the same promise, which largely stimulate the development of trust between strangers. Furthermore, people also realize that good reputation could bring fortune and convenience to them, so accumulating and valuing the reputation scores they had got become common in our society.

Secondly, in the past, reputation scores can only be used by the individual as the consideration into someone or something when individual had to buy something. But the reputation scores was not stable and lacked of reliability. When Tao Bao establish the reputation scores platform to create the opportunities for everyone to comment on merchants who open shop on Tao Bao about their shopping experiences. The effects was amazing, everyone never missed the chance to comment on their shopping experiences and gradually the database of reputation scores become larger and larger, which means consumers could check the shop’ reputation scores before shopping and the reputation scores have the strong power to influence consumers’ shopping decision. So maintaining relatively higher reputation scores seems to be the only way for shopkeepers who want to attract more customers to enter their shop. For consumers who own the higher reputation scores could enjoy more VIP service, such as cash on delivery, a discount of 10％ and new arrival notice. Meanwhile for those who had bad behavior in transaction would get the relatively lower reputation scores and warn consumers to watch out when shopping there, besides Tao Bao would   limit people with bad behavior or lower reputation scores to use some function, even cancel the qualification of doing business or shopping. All of these measures actually ensure that the reputation scores is valuable and respectable.

 

Thirdly, security is the big problem for online shopping and use of credit card. In the past, it is hard to imagine buying something just to use credit card on computer through typing the password by themselves. People used to go for bank to do the transaction, which they think was safe and reliable. Nowadays, Tao Bao cooperates with some banks to invent relatively higher system of safe payment. For example when people prepare to pay the bill online, the confirmation order would be sent to your mobile phone to reconfirm the transaction in order to make sure the transaction is safe and reliable. Besides, the safe software is applied to make sure the access is safe and reliable, which further enhance the safety.  

 

Based on the analysis made above, I think in the future, reputation system could further be strengthened and developed with relating technical progress. But we still need to use some effective ways to ensure that the reputation system can be developed smoothly and reach the ideal situation by effective management.

 

Firstly, ［7］collaboration is about bringing ideas together, about sharing perspectives and insights and effort, for the purpose of getting useful things done. The Collaborative Enterprise is about people, both inside and outside the organization, working together in new ways with the help of new tools. Collaboration enables organizations to achieve levels of performance and innovation far superior to what any one person or unit could do alone. That means we can perfect reputation system through collaboration effectively. As we all know, we cannot rely only on the Tao Bao to construct and develop social reputation system. In order to do that, we need to connect more people and enterprises to make efforts to make the reputation system to become the common standard of the whole society. When the reputation system is embedded in everyone and every companies’ heart, it will bring great convenience to us and push the advance of our society

 

Secondly,［8］Even though most people lack an innate understanding of how to deal with confiict effectively, there are a number of straightforward ways that executives can help their people-and their organizations-constructively manage it. These can be divided into two main areas: strategies for managing disagreements at the point of conflict and strategies for managing conflict upon escalation up the management chain. These methods can help a company move through the conflict that is a necessary precursor to truly effective collaboration and, more important, extract the value that often lies latent in intra-organizational differences. When companies are able to do both, conflict is transformed from a major liability into a significant asset. In order to do that we need to use the common methods to deal with the problems faced in everyday, which means the set of problem-solving mechanism can be shared with all of the people in the organization, they can follow them to solve the problem to enhance the working effects. When they meet some complicated problems that are hard to be solved by themselves, the manager should quickly grasp the points of problems and quickly solve it in case the problem influence employees’ collaboration and working effects, at the same time, manager should directly talk to people involved in conflicts, which are helpful to quickly solve the problem. The health development of reputation system indeed needs the relatively higher effective teams as the support to help it perfect, which can be seen as the positive energy to push and protect the system so as to make it become more effective and bring more convenience to everyone.

 

 

Reference

【1】      Eleni Koutrouli1, Aphrodite Tsalgatidou, Reputation-based Trust Systems for P2P Applications: Design Issues and Comparison Framework

【2】,【3】Auden Jsang, Roslan Ismail,Colin Boyd, A Survey of Trust and Reputation Systems for Online service Provision.

【4】，【5】Leigh L.Thompson The Hind and Heart of (2009)

the negotiator.

【6】JAY A. CONGER, The Necessary Art of Persuasion

【7】Building the Collaborative Enterprise Ten Questions to Ask about Business Opportunities through Collaboration With commentary from Don Tapscott, Tammy Erickson, Lynda Gratton, Rob Cross and Frank Capek

【8】Jeff Weiss and Jonathan Hughes, ACCEPT-AND ACTIVELY MANAGE CONFLICT