Abstract/Summary

In order to decrease social distance and increase trust on their platforms, many online marketplaces allow traders to be represented by profile pictures or avatars. In a laboratory experiment, we investigate whether the presence of seller avatars affects trading behavior in a market. We contrast markets without avatars with markets where avatars genuinely represent traders and markets where avatars can be freely changed at any time and may thus be chosen strategically. At the aggregate level, we find that the presence of genuine avatars increases the trustworthiness of sellers, but that this effect is undone when avatars can be chosen strategically. We do not detect aggregate effects on buyers’ trusting choices. Female avatars are more trusted, and correspondingly in the treatment with free avatar choice men are more likely to represent themselves with a female avatar than vice versa.