e-Reputation: Building Trust in Electronic Commerce
![handle is hein.journals/louilr62 and id is 1211 raw text is: e-Reputation: Building Trust in Electronic Commerce
Susan Block-Lieb*
Who would place a bid in an online auction in which a stranger,
identified only by pseudonym, offers to sell an object based on a
brief written description and a grainy digital photograph? Why
would any set of strangers engage in commerce over the Internet,
whether retail, wholesale or tag sale? If something goes wrong in
the electronic transaction, legal redress may be problematic.
Where e-commerce involves small dollar amounts or transaction
partners in distant or foreign jurisdictions, breach is unlikely to be
followed by litigation since litigation may be too time-consuming,
expensive, or unpredictable.
The academic community has long understood that, while
clearly articulated legal rules and predictable legal enforcement of
those rules enhance commercial transactions, commerce can occur,
and may even flourish, in their absence. Commercial norms can
supplement commercial law,' while verification institutions2 and
non-legal sanctions3 supplement judicial enforcement of that law.
Moreover, traders can manage the risks that underlie commercial
transactions by acquiring information about others' reputation in
the market,4 but relying only on direct personal experience is both
inefficient and perilous: inefficient, because any one individual
will be limited in the number of exchange partners she or he has,
and perilous, because one will discover untrustworthy partners
only through hard experience.5 As a result, markets have
Copyright 2002, by LOUIsIANA LAW REVIEW.
* Professor of Law, Fordham Law School. Many thanks to the participants
in the LSU Law School Symposium on Unifying Commercial Law and the
Fordham Law School Legal Theory Workshop for their coments and
encouragement.
1. See, e.g., Lisa Bernstein, Private Commercial Law in the Cotton Industry:
Creating Cooperation Through Rules, Norms, and Institutions, 99 Mich. L. Rev.
1724 (2001); Lisa Bernstein, Merchant Law in a Merchant Court: Rethinking the
Code's Search for Immanent Business Norms, 144 U. Pa. L. Rev. 1765 (1996).
2. Ronald J. Mann, Verification Institutions in Financing Transactions, 87
Geo. L. J. 2225 (1999) [hereinafter Mann, Verification Institutions]; Ronald J.
Mann, Information Technology and Non-Legal Sanctions in Financing
Transactions, 54 Vand. L. Rev. 1627 (2001) [hereinafter Mann, Information
Technology].
3. David Charny, Nonlegal Sanctions in CommercialRelationships, 104 Harv.
L. Rev. 373 (1990).
4. See, e.g., Lewis A. Kornhauser, Reliance, Reputation, and Breach of
Contract, 26 J.L. & Econ. 691 (1983).
5. Peter Kollock, The Production of Trust in Online Markets at 3, in 16
Advances in Group Processes (Edward J. Lawler, et al eds. 1999).](ViewImageLocal?handle=hein.journals/louilr62&div=49&collection=journals&method=preview&ext=.png&size=3)
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e-Reputation: Building Trust in Electronic Commerce
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