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This study examines the nature and role of Psychological Contract Violation (PCV) in online marketplaces, a critical factor that has been largely overlooked by previous research. Applied to buyer-seller relationships, PCV is defined as a buyer’s perception of having being treated wrongly regarding the terms of an exchange agreement with an individual seller. PCV with individual sellers is proposed as a formative first-order construct driven by the occurrence of fraud, product misrepresentation, contract default, delivery delay, and failure to follow product guarantees and payment policies. PCV with an individual seller is proposed to prompt a generalized perception of PCV with the entire community of sellers in a marketplace.

PCV with the community of sellers is hypothesized to negatively affect buyer transaction behavior in a marketplace by directly impacting transaction intentions, price premiums, trust, perceived risk …