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The Digitization of Word-of-Mouth: Promise and Challenges of Online Feedback Mechanisms

Chrysanthos Dellarocas

Boston University - Department of Management Information Systems

March 2003

MIT Sloan Working Paper No. 4296-03

Online feedback mechanisms harness the bi-directional communication capabilities of the Internet in order to engineer large-scale word-of-mouth networks. Best known so far as a technology for building trust and fostering cooperation in online marketplaces, such as eBay, these mechanisms are poised to have a much wider impact on organizations. Their growing popularity has potentially important implications for a wide range of management activities, such as brand building, customer acquisition and retention, product development, and quality assurance. This paper surveys our progress in understanding the new possibilities and challenges that these mechanisms represent. It discusses some important dimensions in which Internet-based feedback mechanisms differ from traditional word-of-mouth networks and surveys the most important issues related to their design, evaluation, and use. It provides an overview of relevant work in game theory and economics on the topic of reputation. It discusses how this body of work is being extended and combined with insights from computer science, management science, sociology, and psychology in order to take into consideration the special properties of online environments. Finally, it identifies opportunities that this new area presents for OR/MS research.

Number of Pages in PDF File: 36

Keywords: Online Feedback Mechanisms, Reputation Systems, E-commerce, Internet, Game Theory, Management Science, Operations Research

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Date posted: April 8, 2003  

Suggested Citation

Dellarocas, Chrysanthos, The Digitization of Word-of-Mouth: Promise and Challenges of Online Feedback Mechanisms (March 2003). MIT Sloan Working Paper No. 4296-03. Available at SSRN: http://ssrn.com/abstract=393042 or http://dx.doi.org/10.2139/ssrn.393042

Contact Information

Chrysanthos N. Dellarocas (Contact Author)
Boston University - Department of Management Information Systems ( email )
595 Commonwealth Avenue
Boston, MA 02215
United States
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