Social Influence and Opportunistic Behaviour in the Darknet Market: The Role of Escrow, Reputation, and Cheap Talk

• In Event: Rational Choice Perspectives

Abstract

The emergence of a social order within the darknet markets poses a particular puzzle for social scientists. These markets operate beyond the conventional realm without legitimate institutions overseeing operations to protect users from opportunistic behaviour. While much of the existing literature on the darknet focuses on the effects of reputation and escrow systems– where payments for online purchases are processed through the market platform and released only after the transaction is completed – on sales,less attention has been paid to the role of reputation and escrow systems and the use of ‘cheap talk’ in preventing opportunistic behaviour by sellers. This study fills this gap by analysing the factors influencing opportunistic behaviour on one of the largest known darknet platforms to date, AlphaBay, which operated from December 2014 to July 2017. Using two generalised additive models (GAMs), the results suggest that sellers with good reputations are negatively associated with fraud on the darknet market. Conversely, the use of ‘cheap talk’ in item descriptions is positively associated with opportunistic behaviour. This study makes both empirical and theoretical contributions. By illustrating the effects of escrow, reputation, and cheap talk on sellers’ opportunistic behaviour, it underscores the significance of the modality of social influence in reducing opportunistic behaviour in high-uncertain contex.

Authors

• Filippo Andrei, University of Trento

• Giuseppe Alessandro Veltri, Department of Sociology and Social Research, University of Trento