Consumer Learning, Brand Loyalty, and Competition
Marketing Science
Using Online Conversations to Study Word-of-Mouth Communication
Marketing Science
Promotional Chat on the Internet
Marketing Science
When Online Reviews Meet Hyperdifferentiation: A Study of the Craft Beer Industry
Journal of Management Information Systems
Product Reviews and Competition in Markets for Repeat Purchase Products
Journal of Management Information Systems
Signaling theory and information asymmetry in online commerce
Information and Management
Product Comparison Networks for Competitive Analysis of Online Word-of-Mouth
ACM Transactions on Management Information Systems (TMIS)
Creating a Taxonomy for Mobile Commerce Innovations Using Social Network and Cluster Analyses
International Journal of Electronic Commerce
The Effect of Online Consumer Reviews on New Product Sales
International Journal of Electronic Commerce
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Consumer reviews may reflect not only perceived quality but also the difference between quality and price (perceived value). In markets where product prices change frequently, these price-influenced reviews may be biased as a signal of product quality when used by consumers possessing no knowledge of historical prices. In this paper, we develop an analytical model that examines the impact of price-influenced reviews on firm optimal pricing and consumer welfare. We quantify the price effects in consumer reviews for different formats of review systems using actual market prices and online consumer ratings data collected for the digital camera market. Our empirical results suggest that unidimensional ratings, commonly used in most review systems, can be substantially biased by price effects. In fact, unidimensional ratings are more closely correlated with ratings of product value than ratings of product quality. Our findings suggest the importance for firms to account for these price effects in their overall marketing strategy and suggest that review systems could better serve consumers by explicitly expanding review dimensions to separate perceived value and perceived quality.