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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)

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.

Suggested Citation

  • Yang, Jun & Mai, Enping (Shirley), 2010. "Experiential goods with network externalities effects: An empirical study of online rating system," Journal of Business Research, Elsevier, vol. 63(9-10), pages 1050-1057, September.
  • Handle: RePEc:eee:jbrese:v:63:y::i:9-10:p:1050-1057
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    Citations

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    Cited by:

    1. Sebastian Voigt & Oliver Hinz, 2017. "Assessing the economic effects of server launches in free-to-play MMO games," Journal of Business Economics, Springer, vol. 87(4), pages 421-464, May.
    2. repec:spr:elcore:v:17:y:2017:i:4:d:10.1007_s10660-016-9234-7 is not listed on IDEAS
    3. 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.
    4. Bin Guo & Shasha Zhou, 0. "What makes population perception of review helpfulness: an information processing perspective," Electronic Commerce Research, Springer, vol. 0, pages 1-24.
    5. Runyu Chen & Wei Xu, 2017. "The determinants of online customer ratings: a combined domain ontology and topic text analytics approach," Electronic Commerce Research, Springer, vol. 17(1), pages 31-50, March.
    6. 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.
    7. Katarzyna Dziewanowska, 2015. "Dimensions of Real and Virtual Consumer Experiences," Faculty of Management Working Paper Series 42015, University of Warsaw, Faculty of Management.

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