The Market for Fake Reviews

77 Pages Posted: 20 Aug 2020 Last revised: 9 Aug 2021

See all articles by Sherry He

Sherry He

University of California, Los Angeles (UCLA), Anderson School of Management

Brett Hollenbeck

University of California, Los Angeles (UCLA) - Anderson School of Management

Davide Proserpio

Marshall School of Business, University of Southern California

Date Written: August 6, 2021

Abstract

We study the market for fake product reviews on Amazon.com. These reviews are purchased in large private internet groups on Facebook and other sites. We hand collect data on these markets to understand what products buy fake reviews and then collect a panel of data on these products' ratings and reviews on Amazon, as well as their sales rank, advertising, and pricing policies. We find that a wide array of products purchase fake reviews, including products with many reviews and high average ratings. Buying fake reviews on Facebook is associated with a significant but short-term increase in average rating and number of reviews. We exploit a sharp but temporary policy shift by Amazon to show that rating manipulation has a large causal effect on sales. Finally, we examine whether rating manipulation harms consumers or whether it is mostly used by high-quality or young products in a manner akin to advertising. We find that after firms stop buying fake reviews, their average ratings fall and the share of one-star reviews increases significantly, particularly for young products, indicating rating manipulation is mostly used by low-quality products and is deceiving and harming consumers.

Keywords: Fake reviews, online platforms, e-commerce, fraud, consumer protection

JEL Classification: L81, L15, L51, K13

Suggested Citation

He, Sherry and Hollenbeck, Brett and Proserpio, Davide, The Market for Fake Reviews (August 6, 2021). Available at SSRN: https://ssrn.com/abstract=3664992 or http://dx.doi.org/10.2139/ssrn.3664992

Sherry He

University of California, Los Angeles (UCLA), Anderson School of Management ( email )

110 Westwood Plaza
B411
Los Angeles, CA 90049
United States

Brett Hollenbeck (Contact Author)

University of California, Los Angeles (UCLA) - Anderson School of Management ( email )

110 Westwood Plaza
Los Angeles, CA 90095-1481
United States

Davide Proserpio

Marshall School of Business, University of Southern California ( email )

701 Exposition Blvd
Los Angeles, CA Los Angeles 90089
United States

HOME PAGE: http://dadepro.github.io/

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