Review Mechanisms in Online Marketplaces and Adverse Selection: A Law and Economics Analysis

28 Pages Posted: 16 Feb 2017

Date Written: February 1, 2017

Abstract

Review mechanisms are widely used by consumers. From an economic perspective, reviews tackle information asymmetries. However, these mechanisms are often not reliable, which has consequences for contract and consumer law. It is suggested in this article that reviews present mainly three types of bias: biased reviews stricto sensu, lack of reviews and fake reviews. This article discusses the different types of bias in online reviews from a law and economics perspective, and explores possible solutions to tackle this problem. In addition, this article reflects on the legal consequences of biased reviews, particularly when it comes to regulation of consumer law, by suggesting harmonization of review systems through the cooperation of private and public actors.

Keywords: online reviews, online platforms, information asymmetries, bias, regulation, consumer protection

Suggested Citation

Narciso, Madalena, Review Mechanisms in Online Marketplaces and Adverse Selection: A Law and Economics Analysis (February 1, 2017). Maastricht European Private Law Institute Working Paper No. 2017/2. Available at SSRN: https://ssrn.com/abstract=2918764 or http://dx.doi.org/10.2139/ssrn.2918764

Madalena Narciso (Contact Author)

Tilburg Law School ( email )

Tilburg, 5000 LE
Netherlands

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