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Ratings with Heterogeneous Preferences

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  • Jonathan Lafky
  • Robin Ng

Abstract

We examine how product ratings are interpreted in the presence of heterogeneous preferences among both raters and consumers. Raters with altruistic motives should rate for the benefit of future consumers, however an ambiguity arises when preferences are heterogeneous. Multiple equilibria exist in which ratings may reflect the preferences of raters or the preferences of future consumers. In an online experiment, we examine how ratings are selected by raters and interpreted by consumers, and how information about rater preferences or product attributes can influence equilibrium selection. We show how both raters and consumers update their evaluation of what a rating represents in each environment, doing so in similar ways.

Suggested Citation

  • Jonathan Lafky & Robin Ng, 2024. "Ratings with Heterogeneous Preferences," CRC TR 224 Discussion Paper Series crctr224_2024_594, University of Bonn and University of Mannheim, Germany.
  • Handle: RePEc:bon:boncrc:crctr224_2024_594
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    File URL: https://www.crctr224.de/research/discussion-papers/archive/dp594
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    References listed on IDEAS

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    More about this item

    Keywords

    Ratings and Reviews; Altruism;

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software

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