Production of Online Word-of-Mouth: Peer Effects and the Moderation of User Characteristics

Production and Operations Management, 28(7): 1621-1640

44 Pages Posted: 17 Jan 2017 Last revised: 16 Jul 2019

See all articles by Yang Wang

Yang Wang

Purdue University - Krannert School of Management

Paulo Goes

University of Arizona - Department of Management Information Systems

Zaiyan Wei

Purdue University - Krannert School of Management

Daniel D. Zeng

University of Arizona - Department of Management Information Systems

Date Written: July 2019

Abstract

We study peer effects on individuals' contributions to a major form of word of mouth—online reviews. Provided by either consumers or third-party professionals, online reviews influence consumer purchasing decisions and hence sales. Individuals have conflicting incentives of free riding and contributing to social capital when writing reviews. We leverage a "natural experiment," which led to an exogenous expansion in the user population of a major online review platform, to better understand the trade-off. Our empirical findings are mainly two-fold. First, we find that a larger population of audience and peer review writers, an immediate consequence of the exogenous shock, cause individuals to write more reviews with higher quality and assign higher but also more diverse ratings. In addition, we find heterogeneity in peer effects by user activeness, expertise, and popularity. Our findings have implications for companies in managing online feedbacks and for platforms that rely on user contributions.

Keywords: online reviews, user-generated content, peer effects, natural experiments

Suggested Citation

Wang, Yang and Goes, Paulo and Wei, Zaiyan and Zeng, Daniel D., Production of Online Word-of-Mouth: Peer Effects and the Moderation of User Characteristics (July 2019). Production and Operations Management, 28(7): 1621-1640. Available at SSRN: https://ssrn.com/abstract=2899452 or http://dx.doi.org/10.2139/ssrn.2899452

Yang Wang

Purdue University - Krannert School of Management ( email )

1310 Krannert Building
West Lafayette, IN 47907-1310
United States

Paulo Goes

University of Arizona - Department of Management Information Systems ( email )

AZ
United States

Zaiyan Wei (Contact Author)

Purdue University - Krannert School of Management ( email )

100 Grant St
West Lafayette, IN 47907-2076
United States
(765) 494-5958 (Phone)

Daniel D. Zeng

University of Arizona - Department of Management Information Systems ( email )

AZ
United States

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