Examining the Relationship Between Reviews and Sales: The Role of Reviewer Identity Disclosure in Electronic Markets

Abstract

Consumer-generated product reviews have proliferated online, driven by the notion that consumers' decision to purchase or not purchase a product is based on the positive or negative information about that product they obtain from fellow consumers. Using research on information processing (Chaiken 1980) as a foundation, we suggest that in the context of an online community, reviewer disclosure of identity-descriptive information is used by consumers to supplement or replace product information when making purchase decisions and evaluating the helpfulness of online reviews. Using a unique dataset based on both chronologically compiled ratings as well as reviewer characteristics for a given set of products and geographical location-based purchasing behavior from Amazon, we provide evidence that community norms are an antecedent to reviewer disclosure of identity-descriptive information. Amazon members rate reviews containing identity-descriptive information more positively, and the prevalence of reviewer disclosure of identity information is associated with increases in subsequent online product sales. In addition, we show that when reviewers are from a particular geographic location, subsequent product sales are higher in that region, thus highlighting the important role of geography in electronic commerce. Taken together, our results suggest that identity-relevant information about reviewers shapes community members' judgment of products and reviews. Implications for research on the relationship between online reviews and sales, peer recognition systems, and conformity to online community norms are discussed.

Keywords: Digital Markets, Information Processing, Social Identity, Online Reviews, Internet Retailing, Virtual Communities, Identity Disclosure, User-Generated Content

JEL Classification: M3, L86, D40