In markets with asymmetric information between sellers and buyers, feedback mechanisms are important to increase market efficiency and reduce the informational disadvantage of buyers. Feedback mechanisms might work because of self-selection of more trustworthy sellers into markets with such mechanisms or because of reputational concerns of sellers. We show in a field experiment how to disentangle self-selection from reputation effects. Based on 476 taxi rides with four different types of taxis, we find strong evidence for reputation effects, but little support for self-selection effects. We discuss policy implications of our findings.

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