{"title":"A Signaling Theory of the Online Consumer Review Policy","authors":"Jeong-Yoo Kim, Wei Xu","doi":"10.1515/rne-2023-0041","DOIUrl":null,"url":null,"abstract":"In this paper, we consider a two-period model of an experience good with a seller (informed player) and a consumer (uninformed player) in each period. In the model, we examine the seller’s decision about offering refunds for online reviews of his products, and each period consumer’s purchasing decision together with the first period consumer’s reviewing decision. Our main interest is whether a high-quality product seller offers a high amount or a low amount of cashback for an online review. We show that a lenient cashback policy for a review can be a signal of high quality of the product. Intuitively, a high-quality seller can offer a higher amount of cashback to a consumer who reviews, whether the review is positive or negative. This separation is possible mainly due to a difference in the second-period profits across types. We also briefly discuss the effect of the conditional review policy fostering fake reviews.","PeriodicalId":45659,"journal":{"name":"Review of Network Economics","volume":"1 1","pages":""},"PeriodicalIF":0.9000,"publicationDate":"2023-12-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Review of Network Economics","FirstCategoryId":"96","ListUrlMain":"https://doi.org/10.1515/rne-2023-0041","RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q3","JCRName":"ECONOMICS","Score":null,"Total":0}
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Abstract
In this paper, we consider a two-period model of an experience good with a seller (informed player) and a consumer (uninformed player) in each period. In the model, we examine the seller’s decision about offering refunds for online reviews of his products, and each period consumer’s purchasing decision together with the first period consumer’s reviewing decision. Our main interest is whether a high-quality product seller offers a high amount or a low amount of cashback for an online review. We show that a lenient cashback policy for a review can be a signal of high quality of the product. Intuitively, a high-quality seller can offer a higher amount of cashback to a consumer who reviews, whether the review is positive or negative. This separation is possible mainly due to a difference in the second-period profits across types. We also briefly discuss the effect of the conditional review policy fostering fake reviews.
期刊介绍：
The Review of Network Economics seeks to help policy makers, academics, and practitioners keep informed of new research and policy debate in network economics and related subjects that are relevant to the study of network industries. By publishing high quality research on topical issues relevant to network industries, it is hoped readers will be able to gain a deeper understanding of the economic issues involved and that this will improve the quality of decision making by private and public organisations, and debate among researchers. The articles can cover specific network industries, or may deal with general issues that have relevance to a number of different network industries, including topics in the economics of networks, regulation, competition law, or industrial organisation. Papers that provide insights into policy debates are especially welcome, as are up-to-date surveys, book reviews, and comments.
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