Do social networks improve e-commerce?

Social networks have made a significant impact on how Internet users communicate, search for and share data today. Numerous proposals have been made to improve existing distributed systems by leveraging the inherent trust built into social links. For example, many believe that by augmenting online marketplaces with social networking, we can improve trust between transaction partners and increase user satisfaction. In this paper, we perform a detailed study of Overstock Auctions, an auction site that has recently integrated social links into user profiles. Using data on connections between roughly 400,000 Overstock users, we evaluate the impact of social connections on business transactions. Our results show that while the majority of users do not engage in social networking, those who transact with friends from their social network generally obtain significant benefits in the form of higher user satisfaction.