Adverse selection in online "trust" certifications and search results

@article{Edelman2011AdverseSI,
  title={Adverse selection in online "trust" certifications and search results},
  author={Benjamin Edelman},
  journal={Electronic Commerce Research and Applications},
  year={2011},
  volume={10},
  pages={17-25}
}
Widely-used online ‘‘trust” authorities issue certifications without substantial verification of recipients’ actual trustworthiness. This lax approach gives rise to adverse selection: the sites that seek and obtain trust certifications are actually less trustworthy than others. Using an original dataset on web site safety, I demonstrate that sites certified by the best-known authority, TRUSTe, are more than twice as likely to be untrustworthy as uncertified sites. This difference remains… CONTINUE READING
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