Manipulation Through Biased Product Reviews

The Journal of Industrial Economics, Forthcoming

50 Pages Posted: 14 Nov 2017 Last revised: 19 Jan 2020

See all articles by Kemal Kivanç Aköz

Kemal Kivanç Aköz

New York University (NYU) - New York University Abu Dhabi

Cemal Eren Arbatli

National Research University Higher School of Economics

Levent Celik

City, University of London; Charles University in Prague - CERGE-EI (Center for Economic Research and Graduate Education - Economics Institute); National Research University Higher School of Economics

Date Written: January 15, 2020

Abstract

We study a signal-jamming model of product review manipulation in which rational consumers consult product reviews and price to better estimate a product's quality, and a firm, whose quality is either high or low, chooses its price and how much bias to insert into product reviews. We show that both firm types always exert positive effort to manipulate product reviews, and, depending on the equilibrium price level, one or both of them can increase its sales. When the high-type firm exerts more effort than the low-type, review manipulation benefits consumers by raising [lowering] their demand for the high-quality [low-quality] product.

Keywords: Information manipulation, Bayesian inference, product reviews, false advertising, hidden advertisement, price signaling, signal-jamming

JEL Classification: D8, K4, L1, L4

Suggested Citation

Aköz, Kemal Kivanç and Arbatli, Cemal Eren and Celik, Levent, Manipulation Through Biased Product Reviews (January 15, 2020). The Journal of Industrial Economics, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3068345 or http://dx.doi.org/10.2139/ssrn.3068345

Kemal Kivanç Aköz

New York University (NYU) - New York University Abu Dhabi

PO Box 129188
Abu Dhabi
United Arab Emirates

Cemal Eren Arbatli

National Research University Higher School of Economics ( email )

26 Shabolovka Street
1215
Moscow, 119049
Russia

HOME PAGE: http://https://sites.google.com/site/erenarbatli/home

Levent Celik (Contact Author)

City, University of London ( email )

Northampton Square
London, EC1V 0HB
United Kingdom

HOME PAGE: http://www.city.ac.uk

Charles University in Prague - CERGE-EI (Center for Economic Research and Graduate Education - Economics Institute) ( email )

Politickych veznu 7
Prague 1, 111 21
Czech Republic

HOME PAGE: http://www.cerge-ei.cz

National Research University Higher School of Economics ( email )

Myasnitskaya 20
Moscow, Moscow 101000
Russia

HOME PAGE: http://www.hse.ru/en/

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