lecture 6 Flashcards
user generated content
content that is generated or created by an internet user who is a consumer of this information or content
social media
the online platform that hosts user generated content
why did social media take off?
digital social networks (ability to connect with people anywhere anytime)
Machine intelligence (recommendations of friends and content over the network)
smartphones:
They are always on and feeds our social brain
Why online reputation matters:
buyers need to trust sellers:
product descriptions
Fulfilling transaction
sellers also need to trust buyers (though not our focus)
ensure buyer will pay & abide by terms of servie
where does this trust come from
–> Reputation systems! and deisgn choices made by a marketplace
reviews and restaurants study
reviews have a positive, causla impact on demand
as measured via a regression discontinuity design using star ratings
One star improvement leads to an approx 9% increase in revenue
effect for independent restaurants rather than chains
Chain restaurants decline in revenue after yelp is introduced
–> review websites alleviate information uncertainties about products & consumers respond to ratings
visibility of management responses to consumer ratings (is it relly important)
yes, responses are more effective on reviewer 10 than on reviewer 11 because reviewer 10 sees the mon the first page but reviewer 11 sees them on second page
takeaways (managers responding to reviews)
responding to reviews increases future ratings
After adopting responses, rating increase by appx 0.1 stars (out of 5)
About 7.5 percent of a standard deviation
effect larger when responses are visible to reviewer
I.e. on first page
Also see more reviews,longer negative reviews
should managers incentivise reviews
a) higher rate of reviews, higher ratings before conditioning on treatment
b) ratings of treated listings lower than for control
why longer reviews?
Changes in the composition of who reviews, budget conscious, shorter stays, multi-listing hosts
–>price sensitive consumers more likely to respond to incentivised reviews
what happens after the review: no increase in demands
what do incentives reviews do (at airbnb)
induce more reviews
Lead to less positive reviews (no inflated ratings!)
no impact on demand
Results of fake reviews:
hotels with a neighbouring competitor have a 1.9 percent point increase in share of bad reviews
Hotels with an independent hotel as a neighbouring competitor have a 4.7 percentage point increase in share of bad reviews
Independent hotels have a 2.4 percentage point increase in share of positive reviews
–>
hotels with neighbors have more negative reviews
If neighbor is an independent hotel 1 is even more liekly
Independent hotels have higher reviews (suggestive of positive review manipulation, but there ar ecompeting stories)
Punchline: evidence for fake reviews and manipulating online reputation either by competitor or by the firm itself
impact of fake reviews
fake reviews hurt the consumer
share of one star reviews increases after recruiting fake review stops
