Incentive Conflicts and Contracts

1. I feel the best value that eBay has created is the fact that they have a centralized forum that facilitates the sellers as well as a place that buyers can go and find products possibly at a reasonable price. The site is secure and they have made exceptional efforts to make the site friendly to buyers and sellers as well.
2. There would be problems if:

a. The buyer does not receive what they expected. Perhaps the item was misrepresented.
b. Shortly after receiving the item, it stops working.
c. Items received turn out to be stolen property.
d. Buyers or sellers information is compromised.
3. One effort to protect buyers and sellers is providing a forum for feedback reporting. This gives a voice to an individual if they have an issue with the other party. They also investigate all alleged misuses, and possibly ban future actions if deemed necessary.
4.
a. The Feedback Forum is a contracting cost because its costs eBay to maintain the forum for the benefit of its customers.
b. They have established a Rating Scheme that allows customers to view how reliable a party is before doing business with them.
c. User agreements are established to ensure participants are aware of the trading rules.
5. I think that their investing has paid off in their success. I do not see it as overinvesting. Without some of their guidelines, they would not have had the success at the level at which they have. They have made the customers involved feel as though this is a safe and secure environment for purchasing. I don’t think customers would support them as they have if it were any other