Todd is a local of Central New York and will soon be attending Cornell as a non-traditional undergraduate. Within the past year, he has enthusiastically become a member of the greater eBay community. His combination of life experiences as well as his new favorite past-time of buying and selling on eBay made him an excellent choice for an interview as we can see how his story and many others create the unique online network of eBay.

As we know, eBay is an online auction site. Even with this simple definition, we can already see how the eBay phenomenon fits within many of the course’s topics. Over the past semester we have discussed online communities as well as auction mechanisms and as my interview will show, many buyers and sellers on eBay demonstrate the near magical strength between weak links.

Weak Links

Todd began listing items on eBay at the urging of one of his friends. Orignally living with a group of friends in a pair of apartments, he found that many simply abandoned their things when their leases expired. From his original set of sheets, he has made over two hundred sales with items that people simply abandon or items people sell through him on comission. In the Network context, Todd acts as a contact point for people with little time or knowledge of e-Bay. Todd finds many of his items in basements he is sometimes hired to clean and offers to sell the item 50/50. In Todd’s own words, he’s happy to take whatever cut he can because for him, its simply “Free Money.” Just as in the real world, Todd also takes the intiative to contact buyers who appear to like his merchandise and thus, wider communities form between those who buy and sell similar items. A link is created through him between those without the time or energy to understand eBay and those who do.

Market Mechanisms

Another exciting aspect of buying and selling on eBay is the remarkable efficiency and price stability of similar items on eBay. A quick look at the listings of say, iPods, show a general price range where differences in age and condition is taken into account. Todd has to be careful about the pricing of his merchandise, down to the shipping and handling costs because the fees that eBay applies to its sellers can add up. It is not free to list on eBay. Luckily, Todd uses a popular service that eBay offers that consolidated information about past sales. This service powerful tools for sellers to keep track of current market prices, which in effect makes the market more efficient.

Todd has also observed other interesting “economic” activity. For instance, it is often to see the prices of auctions rise rapidly right before an auction closes. Bidding wars are common for select products and often unexpected products (like Aviation Magazines and old Board Games) and it often takes a few initial bids before more bidders are attracted. The last phenomena may be explained with information cascades: that only items desired are items worth bidding on.

Reputation

Finally, an interesting point made in class discussed the ownership of an eBay member’s reputation. Todd highly values his reputation and so far has a perfect score out of 138 responses. “With so many unknowns, the system is heavily based on feedback,” Todd explains. Quite simply, the number of feedbacks represent the likelihood that a transfer is to succeed. This has quite a host of game theory applications as probability of success can be factored in the strategy a player chooses. More advanced game theory explains behavior based on past experiences, such as the past experiences of a potential seller.

The quantity as well as quality of feedback also has wide applications as it is safe to assume that the seller has completed twice as many sales. “So what if a seller has a perfect score of 4, he only did 4 things right,” Todd emphasises. While Buyers can receive feedback, the reputation of a seller is his most prized asset. At times, Todd is more than willing to take a loss just to satisfyg his customers.  If we associate a cost or a certain risk related to one’s confidence in a transaction as part of the framework of a game, I’m sure we could prove that the cost of a bad reputation is higher in the long run.

Thus, Todd is very happy with his hobby. Todd feels like he is part of a community of buyers and sellers and enjoys the challenges of getting things sold.  Todd feels familiar with many of the topics we’ve discussed in our course because he lives networks every day with eBay. He also finds a joy finding “free money” on things that people either abandoned or allow him to sell. I should know first hand, Todd sold a pair of my older mint condition 56k Tivo compatible RCA Wireless Modems for $20 each!