eBay has been in the news lately for a recent revision to its fee structure for sellers. Being one of the largest established trading networks, eBay has a lot of long-time users, some of who did not take kindly to the fairly radical changes in its auction rules. In fact, some sellers even went so far as to organize a boycott of eBay in response to the new rules.

Ultimately, however, efforts like the boycott had little effect on the overall sales on eBay. What could matter more in the long run – and what makes this whole fiasco relevant to the class – are the changes that were made at the same time to eBay’s feedback system. For those who have never used eBay, buyers and sellers were allowed to rate their trading partner on their conduct during the transaction. There were three choices: positive (+1), negative (-1), or neutral (0). All of a user’s feedback ratings were tallied to compute a collective feedback score, which acted as a metric of how well the user could be trusted. Under the new changes to the feedback system, however, buyers can only receive positive feedback, and older feedback doesn’t count towards your score.

We can look at the network of eBay users as a graph with two types of nodes – buyers and sellers – feedback scores serving as the weight on each node. To determine whether or not a buyer and a seller will trade, we can consider the sum of the weights of both buyer and seller: a higher sum means a higher likelihood that the transaction will place (i.e. that the bidder will place a bid and that the seller will accept that bid).

The real question underlying the changes is how accurately feedback scores represent a user’s reliability. If we believe eBay’s take on the situation – that the changes “increase buyer confidence and showcase good sellers” – then we would expect to see more connections being made under the new system (i.e. increased trading volume) as a consequence of that increased buyer confidence in the reputation of their sellers. If, however, we instead believe the protesters, then we’d expect fewer trades and a higher level of distrust amongst buyers and sellers. At this point, there is not enough perspective to make a determination either way; as TheStreet.com pointed out, recent fluctuations in trading volume on eBay were most likely the result of the beginning and end of a promotional period and had nothing to do with the announced changes. It will be interesting to watch and see what the ultimate effect of these changes will be on the Internet’s largest marketplace.