Abstract

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.

Publication Type:	Article
Additional Information:	This is the peer reviewed version of the following article: Celik, L. , Akoz, K. K. and Arbatli, C. E. (2019). Manipulation through Biased Product Reviews. The Journal of Industrial Economics, which is to be published in final form at http://onlinelibrary.wiley.com/journal/10.1111/(ISSN)1467-6451. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Use of Self-Archived Versions.
Publisher Keywords:	Information manipulation, Bayesian inference, product reviews, false advertising, hidden advertisement, price signaling, signal-jamming
Departments:	School of Arts & Social Sciences > Economics
URI:	https://openaccess.city.ac.uk/id/eprint/23489

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