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Theoretical Analysis and Simulation to Investigate the Fundamental Rules of Trust Signaling Games in Network-based Transactions

Authors:
So Young Kim
Junseok Hwang

Keywords: trust; signaling game; equilibrium; agent-based simulation

Abstract:
Online network-based transactions are widespread forms of transactions in e-commerce markets such as peer-to-peer markets or smart media markets. In these markets, the participants need criteria to search, select and manage their partners. One of the most important criteria is the trustworthiness of the partner. The participants aim to enhance the probability of being selected by their opponents through signaling their trustworthiness levels to their opponents. Simultaneously, the opponents adjust their beliefs on the trustworthiness of other participants based on observation of signals. This paper describes this situation using a signaling game in which the seller sends a signal of his/her trust level and the buyer decides his/her payment schedule for the presented signal. The results of the equilibrium analyses suggest criteria for the signaling of the cost structures of participants and the market environment. Additionally, the results of the simulations validate the results of the equilibrium analyses.

Pages: 107 to 113

Copyright: Copyright (c) IARIA, 2011

Publication date: September 25, 2011

Published in: conference

ISSN: 2308-3735

ISBN: 978-1-61208-154-0

Location: Rome, Italy

Dates: from September 25, 2011 to September 30, 2011