Do Incentivized Reviews Poison the Well? Evidence from a Natural Experiment on Amazon.com

Abstract

The growth of e-commerce has increased consumers’ reliance on online product reviews when making purchase decisions. This reliance creates incentives for sellers to solicit reviews, often by offering free or discounted products in exchange for review writing. Platforms typically require such incentivized reviews to disclose the incentive. While prior research has well documented how incentives affect the incentivized reviews or the subsequent organic reviews written by incentivized reviewers, disclosed incentivized reviews (DIRs) and incentivized reviewers constitute only a small share of most review platforms. It is important to understand whether the presence and removal of DIRs affect organic reviews written by other consumers, who constitute the majority. We theorize two competing mechanisms through which DIRs shape subsequent organic reviews: a skepticism effect, which arises when consumers notice the disclosure and infer seller persuasion intent, and an information effect, which arises when consumers attend to the review content but do not fully process the disclosure as a sponsorship signal. Exploiting Amazon.com’s October 2016 ban on DIRs as a natural experiment, we identify the causal effects of banning DIRs on organic reviews. The field evidence shows that banning DIRs increases organic review frequency, length, images, and helpfulness, while leaving rating and sentiment largely unchanged, suggesting that the information effect dominates. Further analyses of post-ban seller strategies show that these findings are not driven by sellers’ substitution toward undisclosed incentivized reviews. We also show that review-reader attention moderates the relative strength of the two mechanisms: the information effect is more pronounced when attention level is low, whereas the skepticism effect is more pronounced when attention level is high. Finally, we confirm the psychological underpinnings of our theory with an online randomized experiment. This study contributes to the literature on online reviews and platform design and provides novel insights to review platform managers.

Keywords: incentivized reviews, online reviews, incentive disclosure, canceling incentives, seller strategy, review reader attention, platform design