Experiential goods with network externalities effects: An empirical study of online rating system
AbstractThis paper uses online users' reviews and sales information from May 2003 to March 2007 to study a new experiential product: online video game (or virtual world). The results suggest that, first of all, for a hedonic product such as an online video game, the availability of online review system could not fully transform experience attributes into search attributes. The empirical study confirms that negative word-of-mouth has more significant impact than positive reviews. The study empirically verifies that the existence of direct network externalities (i.e. a product's value increases when more consumers join the network) is crucial for a hedonic product. The size of the user base signals the quality of the game, and works like a search attribute for potential users. A large user base will reduce the negative impact from unfavorable reviews.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Business Research.
Volume (Year): 63 (2010)
Issue (Month): 9-10 (September)
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Web page: http://www.elsevier.com/locate/jbusres
Experiential goods Hedonic goods Network externalities Word-of-mouth Virtual worlds Experience attributes;
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