Journal
PRODUCTION AND OPERATIONS MANAGEMENT
Volume 28, Issue 7, Pages 1621-1640Publisher
WILEY
DOI: 10.1111/poms.13007
Keywords
online reviews; user-generated content; peer effects; natural experiments
Funding
- Ministry of Science and Technology (China) [2016QY02D0305]
- National Natural Science Foundation of China Innovative Team Grant [71621002]
- Chinese Academy of Science Grant [ZDRW-XH-2017-3]
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We study peer effects on individuals' contributions to a major form of word of mouth-online reviews. Provided by either consumers or third-party professionals, online reviews influence consumer purchasing decisions and hence sales. Individuals have conflicting incentives of free riding and contributing to social capital when writing reviews. We leverage a natural experiment, which led to an exogenous expansion in the user population of a major online review platform, to better understand the trade-off. Our empirical findings are mainly twofold. First, we find that a larger population of audience and peer review writers, an immediate consequence of the exogenous shock, cause individuals to write more reviews with higher quality and assign higher but also more diverse ratings. In addition, we find heterogeneity in peer effects by user activeness, expertise, and popularity. Our findings have implications for companies in managing online feedbacks and for platforms that rely on user contributions.
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