The Ebb and Flow of Online Word of Mouth

Posted: 25 Oct 2016 Last revised: 2 Mar 2019

See all articles by Zhihong Ke

Zhihong Ke

University of Minnesota - Twin Cities - Carlson School of Management

De Liu

University of Minnesota - Twin Cities - Carlson School of Management

Alok Gupta

University of Minnesota - Twin Cities - Carlson School of Management

Date Written: October 6, 2016

Abstract

Motivated by the importance of having reliable online rating systems, we examine the ebb and flow of online ratings with a focus on whether aberrations in online ratings cast a long shadow in subsequent ratings. Our study consists of two complementary pieces: first, we reveal the dynamics following rating aberrations using an econometric analysis of Yelp ratings for 8,943 restaurants in the state of Washington, over a period of 26 months; then, we follow up with two randomized online experiments of joke ratings to corroborate the field evidence and establish the causal nature of our findings. Overall, we find that aberrations in online ratings do not appear to cast a long shadow on future ratings: in the observational study, we find correction percentages of 102.8 % and 103.2% for positive and negative aberrations respectively; in the experiments, the corresponding numbers are 63% and 74% respectively. By and large, these findings suggest that online rating systems are fairly resilient to aberrations. Furthermore, we also find that the correction strength for positive aberrations is on par with those for negative ones, and larger aberrations are followed by stronger corrections. Our findings contribute to the nascent literature on the reliability of online ratings and hold important implications for consumers and online rating platforms.

Keywords: WOM, Online reviews, Valence, Robustness, Experiment

Suggested Citation

Ke, Zhihong and Liu, De and Gupta, Alok, The Ebb and Flow of Online Word of Mouth (October 6, 2016). Available at SSRN: https://ssrn.com/abstract=2858759 or http://dx.doi.org/10.2139/ssrn.2858759

Zhihong Ke

University of Minnesota - Twin Cities - Carlson School of Management ( email )

321 19th Ave S
Minneapolis, MN MN 55455
United States

De Liu (Contact Author)

University of Minnesota - Twin Cities - Carlson School of Management ( email )

19th Avenue South
Minneapolis, MN 55455
United States

Alok Gupta

University of Minnesota - Twin Cities - Carlson School of Management ( email )

19th Avenue South
Minneapolis, MN 55455
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
1,029
PlumX Metrics