“Measuring the Deterioration of Trust on the Dark Web: Evidence from Operation Bayonet”, 2021-06-10 ():
How can we measure trust on illicit darknet market websites? Borrowing from the industrial organization literature, I propose a new empirical strategy that uses vendors’ return on reputation as a proxy for trust.
I use this strategy to quantify the deterioration of trust on the Dream darknet market in response to Operation Bayonet, a law enforcement operation. I tease apart the effects of the operation’s first stage, a conventional market takedown, and its second stage, an impersonation campaign.
I find that the latter statistically-significantly erodes marketplace trust while the former does not. This decrease in trust manifests as an increase in vendors’ returns on reputation. I estimate Operation Bayonet to have increased the difference in mean revenue between a 5-star and a 4-star vendor by 32.5 percentage points.
I further find that deterioration in buyer trust concentrates darknet sales in the hands of fewer vendors, raising the barriers to entry and increasing the effectiveness of future anti-vendor law enforcement operations.
[Keywords: darknet markets, trust, reputation, Operation Bayonet]