Statistics Can Reduce Internet Fraud Essay -- Research Analysis

Many online auction sites help consumers bid on items they might want to possess. These sites include eBay, WebStore, ebid, OnlineAuction, OZtion, Overstock, and a whole slew of others. Currently there is no system to protect consumers from fraudulent sales. When someone bids for an item, consumers trust both the seller and the online auctioneer to be both honest and ethical when presenting items for bid. Many of the auction houses, including Sotheby's and Christie's have their experts examine each piece to prove authenticity. However, it is not all bad news. To help protect consumers from fraud, Joseph Gastwirth and Wesley Johnson have found that the use of statistics answers the problem of authenticity. Joseph Gastwirth is a Professor of Statistics and economics at George Washington University. Wesley Johnson is a Professor of Statistics at the University of California at Irvine. These two men have worked together to produce an article for future print in the Journal of the Royal Statistical Society called Series A: Statistics in Society. This paper examines the preview article published in the Significance Magazine entitled "Dare you to buy a Henry Moore on eBay." Using statistics enables then to tell where the frauds are lurking. The Statistics Gastwirth and Johnson used a method similar to that of the Hui-Walter method "used to estimate the accuracy rates of clinical tests and survey classifications. (Gastwirth & Johnson, 2011) This test method utilizes two subpopulations, each with its own prevalence. In the case of the test for authentication of Henry Moore's on the Internet, the two subpopulations were drawings and sculptures, and the second was lithographs and etchings. These two gro... ...hnson, 2011) Figure 2 represents the "maximum likelihood estimates of the two prevalence parameters and accuracy rates of the two evaluators. Maximum likelihood estimates were obtained using the EM algorithm with standard errors based on the bootstrap using the program TAGS." (Gastwirth & Johnson, 2011) TAGS, is a program for the evaluation of test accuracy in the absence of a gold standard. Thus with all questions from Darrell Huff's book "How to Lie With Statistics" answered, we can safely and accurately conclude that the method used by Gastwirth and Johnson can and should be used by those who intend to purchase artwork off the Internet. Works Cited Gastwirth, J. & Johnson, W. (2011, March 14). Dare you to buy a Henry Moore on eBay? Statistics can tell you what to avoid. Significance Magazine, 8(1), 10-14. doi:10.1111/j.1740-9713.2011.00470x.