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Manipulation Through Biased Product Reviews*
Author(s) -
Aköz Kemal Kıvanç,
Arbatli Cemal Eren,
Celik Levent
Publication year - 2020
Publication title -
the journal of industrial economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.93
H-Index - 77
eISSN - 1467-6451
pISSN - 0022-1821
DOI - 10.1111/joie.12240
Subject(s) - product (mathematics) , quality (philosophy) , marketing , product type , business , microeconomics , economics , industrial organization , computer science , mathematics , epistemology , philosophy , geometry , programming language
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.