Skip to main content Accessibility help
×
×
Home

Reputation in the Internet black market: an empirical and theoretical analysis of the Deep Web

  • ROBERT AUGUSTUS HARDY (a1) and JULIA R. NORGAARD (a1)

Abstract

This paper is an analysis of the role reputation plays in the Deep Web using data from the Internet black-market site, The Silk Road. This encrypted online marketplace employed cryptocurrency and functioned over the Tor network. Utilizing a modeling technique, informed by trade auction theory, we investigate the effect of seller reputation. Analysis of the seller's reputation gives us insights into the factors that determine the prices of goods and services in this black marketplace. Data on cannabis listings is parsed from the Silk Road website and covers an 11-month time period, from November 2013 to October 2014. This data demonstrates that reputation acts as a sufficient self-enforcement mechanism to allow transactions. These findings exemplify the robustness of spontaneous order with respect to the Deep Web as an emergent marketplace.

  • View HTML
    • Send article to Kindle

      To send this article to your Kindle, first ensure no-reply@cambridge.org is added to your Approved Personal Document E-mail List under your Personal Document Settings on the Manage Your Content and Devices page of your Amazon account. Then enter the ‘name’ part of your Kindle email address below. Find out more about sending to your Kindle. Find out more about sending to your Kindle.

      Note you can select to send to either the @free.kindle.com or @kindle.com variations. ‘@free.kindle.com’ emails are free but can only be sent to your device when it is connected to wi-fi. ‘@kindle.com’ emails can be delivered even when you are not connected to wi-fi, but note that service fees apply.

      Find out more about the Kindle Personal Document Service.

      Reputation in the Internet black market: an empirical and theoretical analysis of the Deep Web
      Available formats
      ×

      Send article to Dropbox

      To send this article to your Dropbox account, please select one or more formats and confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your <service> account. Find out more about sending content to Dropbox.

      Reputation in the Internet black market: an empirical and theoretical analysis of the Deep Web
      Available formats
      ×

      Send article to Google Drive

      To send this article to your Google Drive account, please select one or more formats and confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your <service> account. Find out more about sending content to Google Drive.

      Reputation in the Internet black market: an empirical and theoretical analysis of the Deep Web
      Available formats
      ×

Copyright

Corresponding author

References

Hide All
Allen, F. (1984), ‘Reputation and product quality’, The RAND Journal of Economics: 311–327.
Benson, B. L. (1989), ‘The Spontaneous Evolution of Commercial Law’, Southern Economic Journal, 55 (3): 644661. Retrieved from http://search.proquest.com/docview/56371368?accountid=14541.
Briere, M., Oosterlinck, K., and Szafarz, A. (2013), ‘Virtual Currency, Tangible Return: Portfolio Diversification with Bitcoins’, ULB – Universite Libre de Bruxelles, Working Papers CEB: 13–031. Retrieved from http://search.proquest.com/docview/1438547719?accountid=14541.
Chandler, N. (2013), ‘How the Deep Web Works’, from HowStuffWorks.com website: http://computer.howstuffworks.com/internet/basics/how-the-deep-web-works1.htm (accessed July 16, 2014).
Christin, N. (2012), ‘Traveling the Silk Road: A Measurement Analysis of a Large Anonymous Online Marketplace’, Cornell University Library Working Paper, 12–018.
Clay, K. (1997), ‘Trade without Law: Private–Order Institutions in Mexican California’, Journal of Law, Economics, and Organization, 13 (1): 202231.
DarkNet Markets. (2014), Reddit website: http://www.reddit.com/r/DarkNetMarkets (accessed October 14, 2014).
European Central Bank (ECB). (2012), Virtual Currency Schemes, http://www.ecb.int/pub/pdf/other/virtualcurrencyschemes201210en.pdf (accessed Mar. 2, 2015).
Fries, A., Anthony, R. W., Cseko, A. Jr, Gaither, C. C., and Schulman, E. (2008), The Price and Purity of Illicit Drugs: 1981–2007 (No. IDA-P-4369). Alexandria VA: Institute for Defense Analyses.
Gambetta, D. (2010), Codes of the Underworld: How Criminals Communicate, Princeton, NJ: Princeton University Press.
Greif, A. (1989), ‘Reputation and Coalitions in Medieval Trade: Evidence on the Maghribi Traders’, The Journal of Economic History, 49 (4): 857882.
Greif, A. (1993), ‘Contract Enforceability and Economic Institutions in Early Trade: The Maghribi Traders’ Coalition’, The American Economic Review, 83 (3): 525–48.
Greif, A. (2012), ‘The Maghribi Traders: A Reappraisal?’, Economic History Review, 65 (2): 445469.
Grinberg, R. (2011), ‘Bitcoin: An Innovative Alternative Digital Currency’, Hastings Science & Technology Law Journal, 160–207.
Houser, D. and Wooders, J. (2006), ‘Reputation in Auctions: Theory, and Evidence from eBay’, Journal of Economics & Management Strategy, 15 (2): 353369.
Hu, X., Lin, Z., Whinston, A. B., and Zhang, H. (2004), ‘Hope or Hype: On the Viability of Escrow Services as Trusted Third Parties in Online Auction Environments’, Information Systems Research, 15 (3): 236249. http://dx.doi.org/10.1287/isre.1040.0027.
Kilmer, B. and Pacula, R. L. (2009), ‘Estimating the Size of the Global Drug Market: A Demand-side Approach’, A Report on Global Illicit Drug Markets, 1998–2007, 25.
Klein, B. and Leffler, K. (1981), ‘The Role of Market Forces in Assuring Contractual Performance’, Journal of Political Economy, 89 (4): 615641.
Leeson, P. T. (2005), ‘Endogenizing Fractionalization’, Journal of Institutional Economics, 1 (1): 7598. Retrieved from http://search.proquest.com/docview/213620017?accountid=14541.
Leeson, P. T. (2007), ‘An-arrgh-chy: The Law and Economics of Pirate Organization’, Journal of Political Economy, 115 (6): 10491094.
Leeson, P. T. (2010), Anarchy Unbound: How Much Order Can Spontaneous Order Create?, Cheltenham, UK and Northampton, MA: Elgar.
McDonald, C. and Slawson, V. (2002), ‘Reputation In An Internet Auction Market’, Economic Inquiry, 40 (4): 633650.
Melnik, M. and Alm, J. (2002), ‘Does a Seller's E-Commerce Reputation Matter? Evidence from eBay Auctions’, Journal of Industrial Economics, 50 (3): 337349.
Milgrom, P. R., North, D. C., and Weingast, B. R. (1990), ‘The Role of Institutions in the Revival of Trade: The Law Merchant, Private Judges and the Champagne Fairs’, Economics and Politics, 2 (1): 123.
Mueller, D. C. (1988), ‘Anarchy, the Market, and the State’, Southern Economic Journal, 54 (4): 821830.
Onion Routing. (2014), Onion Routing website: http://www.onion-router.net/ (accessed September 7, 2014).
Posner, R. A. (1980), ‘A Theory of Primitive Society, with Special Reference to Law’, The Journal of Law and Economics, 23 (1): 153.
Powell, B. and Stringham, E. P. (2009), ‘Public Choice and the Economic Analysis of Anarchy: A Survey’, Public Choice, 140 (3/4): 503538.
Resnick, P. and Zeckhauser, R., (2001), ‘Trust Among Strangers in Internet Transactions: Empirical Analysis of eBay's Reputation System’, Mimeo.
Shapiro, C. (1983), ‘Premiums for High Quality Products as Returns to Reputations’, The Quarterly Journal of Economics, 98 (4): 659680.
Skarbek, E. S. (2008), ‘Remittances and Reputations in Hawala Money-Transfer Systems: Self-Enforcing Exchange on an International Scale’, Journal of Private Enterprise, 24 (1): 95117.
Tucker, J. (2014), Personal Interview, September 23, 2014.
U.S. vs. Ross Ulbricht, Government Exhibit 940D. 14 Cr. 68. New York Southern District Court. 30 Sept. 2013.
Recommend this journal

Email your librarian or administrator to recommend adding this journal to your organisation's collection.

Journal of Institutional Economics
  • ISSN: 1744-1374
  • EISSN: 1744-1382
  • URL: /core/journals/journal-of-institutional-economics
Please enter your name
Please enter a valid email address
Who would you like to send this to? *
×

Metrics

Altmetric attention score

Full text views

Total number of HTML views: 0
Total number of PDF views: 0 *
Loading metrics...

Abstract views

Total abstract views: 0 *
Loading metrics...

* Views captured on Cambridge Core between <date>. This data will be updated every 24 hours.

Usage data cannot currently be displayed