Commercial markets as communication markets: uncertainty reduction through mediated information exchange in online auctions

Abstract

This research conceptualizes behaviors in online commercial transactions as communication acts intended to reduce uncertainty between interactants. Uncertainty reduction theory and predicted outcome value theory are used to contextualize individuals' motivations and behaviors in the risky and uncertain environment of online consumer-to-consumer (C2C) auctions. Data from 6477 randomly-selected auctions conducted over eBay.com indicate that more commodity information leads to more, and higher, final bids; higher seller reputation results in fewer bids for less money; and greater system security features result in fewer bids. Additionally, holding item type constant, much more variance in final bid price and bid activity can be explained by these factors as item value increases, although important differences in the direction of relations emerge as well. Based on these findings, current theoretical perspectives on uncertainty reduction are extended to the environment of computer-mediated communication and interpretations are offered to explain individuals' behaviors in initial encounters in online auctions.