Value of Multi-Dimensional Rating Systems: An Information Transfer View

Liu, Y., P-y Chen and Y. Hong (2014), “The Value of Multi-dimensional Online Rating Systems: An Information Transfer View”, Proceedings of the 35th International Conference on Information Systems (ICIS), Auckland, New Zealand.

18 Pages Posted: 14 Nov 2014

See all articles by Ying Liu

Ying Liu

Arizona State University (ASU) - Department of Information Systems

Pei-Yu Chen

Arizona State University (ASU) - Department of Information Systems

Yili Hong

Arizona State University (ASU) - W.P. Carey School of Business

Date Written: November 6, 2014

Abstract

This paper empirically examines the value of multi-dimensional online rating system (versus single-dimensional online rating system) from an information transfer perspective. Our key identification strategy hinges on a natural experiment that took place on TripAdvisor.com that allows us to identify the causal effect with a difference-in-difference approach. Our key findings, first show that consumers’ ratings for the same restaurants are significantly higher in TripAdvisor after its adoption of the multidimensional rating system. Second, we show that restaurants with lower price level benefit more from rating system change. Third, we show that the ratings in single-dimensional rating system are similar to the lowest dimension in the multi-dimensional system. The results demonstrate the information value of multi-dimensional ratings. Our study provides important implications for a better design of online WOM systems to help consumers match their preferences with product/service attributes.

Keywords: multi-dimensional rating system, WOM performance, natural experiment, difference-in-difference

Suggested Citation

Liu, Ying and Chen, Pei-Yu and Hong, Yili, Value of Multi-Dimensional Rating Systems: An Information Transfer View (November 6, 2014). Liu, Y., P-y Chen and Y. Hong (2014), “The Value of Multi-dimensional Online Rating Systems: An Information Transfer View”, Proceedings of the 35th International Conference on Information Systems (ICIS), Auckland, New Zealand. . Available at SSRN: https://ssrn.com/abstract=2519914

Ying Liu

Arizona State University (ASU) - Department of Information Systems ( email )

Tempe, AZ
United States

Pei-Yu Chen

Arizona State University (ASU) - Department of Information Systems ( email )

Tempe, AZ
United States

Yili Hong (Contact Author)

Arizona State University (ASU) - W.P. Carey School of Business ( email )

Tempe, AZ 85287-3706
United States

HOME PAGE: http://yilihong.github.io/

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