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Promotional Reviews: An Empirical Investigation of Online Review Manipulation

Author

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  • Dina Mayzlin
  • Yaniv Dover
  • Judith A. Chevalier

Abstract

Online reviews could, in principle, greatly improve consumers' ability to evaluate products. However, the authenticity of online user reviews remains a concern; firms have an incentive to manufacture positive reviews for their own products and negative reviews for their rivals. In this paper, we marry the diverse literature on economic subterfuge with the literature on organizational form. We undertake an empirical analysis of promotional reviews, examining both the extent to which fakery occurs and the market conditions that encourage or discourage promotional reviewing activity. Specifically, we examine hotel reviews, exploiting the organizational differences between two travel websites: Expedia.com and TripAdvisor.com. While anyone can post a review on TripAdvisor, a consumer can only post a review of a hotel on Expedia if she actually booked at least one night at the hotel through the website. We examine differences in the distribution of reviews for a given hotel between TripAdvisor and Expedia. We exploit the characteristics of a hotel's neighbor. We show that hotels with a nearby neighbor have more one- and two-star (negative) reviews on TripAdvisor relative to Expedia. We argue that the net gains from promotional reviewing are likely to be highest for independent hotels that are owned by single-unit owners and lowest for branded chain hotels that are owned by multi-unit owners. Our methodology thus isolates hotels with a disproportionate incentive to engage in promotional reviewing activity. We show that the hotel neighbors of hotels with a high incentive to fake have more one- and two-star (negative) reviews on TripAdvisor relative to Expedia than do hotels whose neighbors have a low incentive to fake. Furthermore, we show that hotels with a high incentive to fake have a greater share of five-star (positive) reviews on TripAdvisor relative to Expedia.

Suggested Citation

  • Dina Mayzlin & Yaniv Dover & Judith A. Chevalier, 2012. "Promotional Reviews: An Empirical Investigation of Online Review Manipulation," NBER Working Papers 18340, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:18340 Note: IO PR
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    References listed on IDEAS

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    Cited by:

    1. Dobrescu, Loretti I. & Luca, Michael & Motta, Alberto, 2013. "What makes a critic tick? Connected authors and the determinants of book reviews," Journal of Economic Behavior & Organization, Elsevier, vol. 96(C), pages 85-103.
    2. Dmitry Ryvkin & Danila Serra & James Tremewan, 2015. "I paid a bribe: Information Sharing and Extortionary Corruption," Working Papers wp2015_07_01, Department of Economics, Florida State University.
    3. Mo Xiao & Jiandong Ju & Ying Fan, 2013. "Losing to Win: Reputation Management of Online Sellers," 2013 Meeting Papers 192, Society for Economic Dynamics.
    4. Miklós-Thal, Jeanine & Schumacher, Heiner, 2013. "The value of recommendations," Games and Economic Behavior, Elsevier, vol. 79(C), pages 132-147.
    5. Michael Luca & Georgios Zervas, 2013. "Fake It Till You Make It: Reputation, Competition, and Yelp Review Fraud," Harvard Business School Working Papers 14-006, Harvard Business School, revised May 2015.
    6. repec:eee:eecrev:v:94:y:2017:i:c:p:1-22 is not listed on IDEAS

    More about this item

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism

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