With a view to understanding how online platforms could be regulated to foster trust, transparency and fairness, this study used behavioural research to investigate the effect of enhanced transparency on consumer trust and behaviour in three areas:
- Area 1: The criteria for ranking and presentational features of search results
- Area 2: The identity of contractual parties
- Area 3: Quality controls on consumer reviews, ratings, and endorsement systems
The study found that greater online transparency has three key effects on consumers. It is important in decision taking; it increases trust and confidence in the online environment; and, all things being equal, increases the probability of product selection.
As such, transparency is clearly in the interest of consumers. At the same time, it is in the interest of platforms who could expect to see a growth in online activity as a result of increased consumer confidence and trust.
The study's main findings can be summarised as follows:
- Compared to having no information on the criteria for ranking search results, when consumers are informed that the ranking is based on a specific criterion such as popularity, the probability of selecting the product is 115% higher, irrespective of its ranking position and visual prominence on the screen.
- Providing the additional information that the third-party trader’s status ensures consumer rights should there be any post-purchase problems, increases the probability of product selection over no information by almost 50%.
- Compared to having no user reviews or ratings, a review in a prominent position on the website leads to a 200% increase in the probability of choosing the product. The same is found when the product receives the highest user rating. Information that reviewers have actually used the product increases the probability of choosing it by 40%.
Additionally, of the consumer surveyed:
- 70% said that the information about criteria for presenting search results was important in their decision and made them more confident and trusting;
- 67.9% and 69.9% respectively agreed that the information about contractual identity and its implications was important in their decision and made them more confident and trusting;
- 83.9% and 85.9% respectively reported that the information about who is included in user reviews was important in their decision and made them more confident and trusting.
HOW IS THE STUDY USEFUL?
The results of this study highlight the importance of design-based regulation to build regulatory standards into the design of systems. In order to achieve greater online transparency leveraging behavioural insights, it is recommended to:
- make the criteria used to order search results clear to consumers and allow them to re-order search results using a range of criteria;
- raise consumers’ awareness of the identity of contractual parties and their understanding of the legal implications;
- encourage platforms to implement quality controls for improved authenticity and greater numbers of reviews.
The findings of the study informed the Commission’s “New Deal for Consumers” initiative and will provide evidence for further work on online platforms, including legislative initiatives, non-legislative policy initiatives (e.g. enforcement, awareness-raising) and/or self-regulatory efforts by industry.