Do Product Reviews Really Reduce Search Costs?

Journal of Organizational Computing and Electronic Commerce; Forthcoming

42 Pages Posted: 28 May 2017

See all articles by Naveen Amblee

Naveen Amblee

Korea Advanced Institute of Science and Technology (KAIST)

Rahat Ullah

Graduate School of Culture Technology, KAIST

Wonjoon Kim

Korea Advanced Institute of Science and Technology (KAIST)

Date Written: April 26, 2017

Abstract

The literature on online product reviews is based on the fundamental premise that reviews impact search costs and also affect consumer confidence in their purchase decisions. However, this premise has not been proven in the literature. To this end we conducted an experiment using an eye-tracking machine to measure the impact of online editorial and customer reviews on consumer information search costs and on decision confidence. Search costs in this study are defined in terms of time costs and cognitive effort costs. We find that both editorial reviews and customer reviews when present separately reduce both search time and cognitive effort considerably, but not when present together. We also find that the presence of both types of reviews increases decision confidence considerably, but do not lower search costs. These results suggest that ecommerce firms can benefit from the presence of either or both editorial and customer reviews through either lower search costs, or higher decision confidence. We conclude with several managerial recommendations for e-commerce firms.

Keywords: ecommerce, product reviews, decision confidence, eye-tracking

JEL Classification: D12, D03, D19

Suggested Citation

Amblee, Naveen and Ullah, Rahat and Kim, Wonjoon, Do Product Reviews Really Reduce Search Costs? (April 26, 2017). Journal of Organizational Computing and Electronic Commerce; Forthcoming, Available at SSRN: https://ssrn.com/abstract=2975641

Naveen Amblee (Contact Author)

Korea Advanced Institute of Science and Technology (KAIST) ( email )

373-1 Kusong-dong
Yuson-gu
Taejon 305-701, 130-722
Korea, Republic of (South Korea)

Rahat Ullah

Graduate School of Culture Technology, KAIST ( email )

373-1 Kusong-dong
Yuson-gu
Taejon 305-701, 130-722

Wonjoon Kim

Korea Advanced Institute of Science and Technology (KAIST) ( email )

291 Gwahak-ro
Yuseong-gu
Daejon, 305-701
Korea, Republic of (South Korea)
+82-42-350-4336 (Phone)

HOME PAGE: http://wjkim.kaist.ac.kr

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