Finding the Wise and the Wisdom in a Crowd: Simultaneously Estimating the Underlying Qualities of Raters and Items from a Series of Reviews

63 Pages Posted: 30 Sep 2019 Last revised: 24 Feb 2020

See all articles by Nicolas Carayol

Nicolas Carayol

University of Bordeaux

Matthew O. Jackson

Stanford University - Department of Economics; Santa Fe Institute

Date Written: September 15, 2019

Abstract

Consumers and businesses rely on others' ratings of items when making choices. However, individual reviewers vary in their accuracy, and some are biased -- either systematically over- or under-rating items relative to others' tastes, or even deliberately distorting a rating. We provide a new technique that processes ratings by a group of reviewers over a set of items and simultaneously evaluates the individual reviewers' accuracies and biases, and provides unbiased and efficient estimates of the items' true qualities. We show that our technique generates significant improvements over an average of ratings in recovering qualities even with small data sets, and that this improvement increases as the number of items increases. Revisiting the famous 1976 wine tasting that compared Californian and Bordeaux wines, we find substantial variation in reviewers' accuracies and a ranking that differs from the original one based on average ratings. In addition, we apply our methodology to more than forty-five thousand ratings of Bordeaux wines. Our estimated wine qualities significantly predict prices when controlling for prominent experts' ratings and numerous fixed effects. We also find that the elasticity of a wine price in an expert's ratings increases with that expert's accuracy.

Keywords: Ratings, Experts, Reviews, Qualities, Scoring, Aggregating Ratings, Wine Ratings, Wine, Bias

JEL Classification: D80, D82, C13, C15, Q10

Suggested Citation

Carayol, Nicolas and Jackson, Matthew O., Finding the Wise and the Wisdom in a Crowd: Simultaneously Estimating the Underlying Qualities of Raters and Items from a Series of Reviews (September 15, 2019). Available at SSRN: https://ssrn.com/abstract=3419592 or http://dx.doi.org/10.2139/ssrn.3419592

Nicolas Carayol

University of Bordeaux ( email )

Avenue Léon Duguit
Bordeaux, 33000
France

Matthew O. Jackson (Contact Author)

Stanford University - Department of Economics ( email )

Landau Economics Building
579 Serra Mall
Stanford, CA 94305-6072
United States
1-650-723-3544 (Phone)

HOME PAGE: http://www.stanford.edu/~jacksonm

Santa Fe Institute

1399 Hyde Park Road
Santa Fe, NM 87501
United States

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