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Experiential goods with network externalities effects: An empirical study of online rating system

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  • Yang, Jun
  • Mai, Enping (Shirley)
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    Abstract

    This 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 Info

    Article provided by Elsevier in its journal Journal of Business Research.

    Volume (Year): 63 (2010)
    Issue (Month): 9-10 (September)
    Pages: 1050-1057

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    Handle: RePEc:eee:jbrese:v:63:y::i:9-10:p:1050-1057

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    Web page: http://www.elsevier.com/locate/jbusres

    Related research

    Keywords: Experiential goods Hedonic goods Network externalities Word-of-mouth Virtual worlds Experience attributes;

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    Cited by:
    1. Zhang, Jason Q. & Craciun, Georgiana & Shin, Dongwoo, 2010. "When does electronic word-of-mouth matter? A study of consumer product reviews," Journal of Business Research, Elsevier, vol. 63(12), pages 1336-1341, December.
    2. De Maeyer, Peter & Estelami, Hooman, 2011. "Consumer perceptions of third party product quality ratings," Journal of Business Research, Elsevier, vol. 64(10), pages 1067-1073, October.

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