Prisoner's Dilemma

Considering the Prisoner's Dilemma in this chapter, provide your own insight on how sites such as eBay "work" for most participants of this popular online auction site. Do they really work? Or is there too much risk?

Shirky sums up the description of the four possibilities of the Prisoner's Dilemma. They are: 1. We each stick to our stories, they've got no evidence, and they keep us both overnight. 2. I stick to the bystander story and you turn me in. You get the reward, while I get charged. 3. I turn you in while you stick to the story. I get a reward, while you get charged. 4. We turn each other in. We both get charged. Shirky notes that the worst outcome, being number four is the rational one.

With eBay, as from personal experience, this site kind of works like this. EBay definitely works, it would not be as successful as it was today. The more you sell an item, the more credibility and a higher ratings you will attain if you provide good service. If the seller provides good service and has a high score, then there is no guessing game on how good the business is. However, if the person has no credibility, then the guessing game begins. If the person has never sold an item before, most people stay away because you never know what item or items you're getting. You don't know if the person is selling good quality products, if the item they have online really is the product, and so on. That's when eBay is too much of a risk. When there is the unknown of the seller and the buyer, there is a lot of risk. When there's too much risk, the Prisoner's Dilemma for eBay becomes: 1. Both the seller and buyer hold their end of the deal. Both are rewarded. 2. The buyer doesn't follow through on the deal and the seller ends up with a loss. 3. The seller doesn't follow through on the deal and the buyer ends up with a loss. 4. Both the seller and the buyer do not hold their end of the deal, both being empty handed in the end. Another risk is that the seller could be selling their product for too much, tricking the buyer into a "good deal" when it really isn't. When a seller does not have credibility and great history on eBay, risk involves a lot. Trust needs to be made between the bond of the buyer and the seller. Trust from the seller is that the item they're selling is indeed what they are describing and is not overpriced. And trust from the buyer is that they will pay the seller their money for their product. With trust, outcome number one is the most rational and the most desired from eBay consumers.

It all seems tricky, but eBay has been on the web for years, so it obviously does work. Buyers and sellers just need to trust one another, and a smooth transaction can be made. And most buyers and sellers do trust each other, giving eBay great success.