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The Market for Reviews: Strategic Behavior of Online Product Reviewers with Monetary Incentives

Author

Listed:
  • Verena Dorner

    (Karlsruhe Institute of Technology)

  • Marcus Giamattei

    (Bard College Berlin
    University of Passau)

  • Matthias Greiff

    (Clausthal University of Technology)

Abstract

Customer reviews reduce search cost and uncertainty about a product’s quality. Hence, the quantity and quality of reviews has positive impacts on purchase intentions, sales, and customer satisfaction. In order to increase review quality, retailers and online platforms employ different monetary incentives. We experimentally compare two different incentive schemes: an incentive scheme in which reviewers receive a flat salary, which is independent of review quality, and a tournament incentive scheme in which the reviewer who wrote the most helpful review receives a bonus payment. Helpfulness ratings are assigned by the other reviewers. In our experiment, adverse consequences arise under the tournament incentive scheme. Strategic considerations give rise to strategic downvoting, so that reviewers assign low helpfulness ratings to others’ reviews in order to maximize their expected payoffs. Review writing behavior remains unaffected: the tournament incentive scheme does not affect review quality. However, it does destroy the signaling power of helpfulness ratings.

Suggested Citation

  • Verena Dorner & Marcus Giamattei & Matthias Greiff, 2020. "The Market for Reviews: Strategic Behavior of Online Product Reviewers with Monetary Incentives," Schmalenbach Business Review, Springer;Schmalenbach-Gesellschaft, vol. 72(3), pages 397-435, July.
    • Handle: RePEc:spr:schmbr:v:72:y:2020:i:3:d:10.1007_s41464-020-00094-y
    DOI: 10.1007/s41464-020-00094-y
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    4. Krügel, Jan Philipp & Paetzel, Fabian, 2021. "The Impact of Fake Reviews on Reputation Systems and Efficiency," VfS Annual Conference 2021 (Virtual Conference): Climate Economics 242415, Verein für Socialpolitik / German Economic Association.

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