Spotting Lemons in Platform Markets: A Conjoint Experiment on Signaling

This study addresses the understudied question of how content integrity for digital goods is signaled ex-ante in the absence of centralized oversight in self-organizing platforms. We build on signaling theory to theorize three classes of signals to explain how and why they influence platform user behavior. Experimental data from 380 users show that in the absence of centralized oversight in platforms a portfolio of signaling mechanisms is used to assess content integrity. Platform users differentially weigh platform, content, and contributor signals but simultaneously triangulate them to form holistic inferences about risk vis-à-vis benefit to spot potential “lemons” in a platform market. Implications for practice, especially for platform design, are also discussed.