Do people implicitly adjust for extreme online review score bias when evaluating quality?

Abstract

The internet has led to an increasing reliance on online reviews (i.e. electronic word-of-mouth) to inform consumption decisions. Yet there is evidence that some reviews are faked in order to manipulate the perceived quality of a good. This study tests whether removing 1-star and 5-star reviews changes evaluations of quality, and whether individuals appear to be applying implicit weights to reviews of a given score in order to adjust for bias. A randomised online experiment on 501 individuals finds that removing some 1-star and 5-star reviews in a mean-preserving fashion does not change perceived quality of goods on average. Individuals appear to implicitly place stronger weights on positively and negatively valenced reviews relative to reviews at the midpoint of the scale. However, this weighting is not symmetric. It takes an estimated 4.7 5-star reviews to offset an additional 1-star review. This supports the presence of a negativity bias in the context of online reviews. Hence, consumers are vulnerable to being led to believe that the quality of a good is worse than it truly is when disingenuous 1-star reviews are present. This has the potential to discourage the purchase of goods that have high quality, leading to foregone consumer surplus.

Bio

Neel Ocean is a Research Fellow in Behavioural Economics within the Economics division at LUBS, and is funded by the IKnowFood project. He has undergraduate and masters degrees from LSE, and a PhD in Economics from the University of Warwick. Neel's main research areas include: judgement and decision making, behavioural and experimental economics, health & well-being, and personality. He is keen on transcending disciplinary boundaries in order to solve problems more effectively. He has a background in mathematics; as well as a strong interest in computing and technology (which he hopes to combine with decision-making in the future), and music (which he might try and sneak into a paper one of these days as well).