Promotional Reviews: An Empirical Investigation of Online Review Manipulation

TLDR

Firms' incentives to manufacture biased user reviews impede review usefulness. The study examines how review differences between Expedia and TripAdvisor vary across hotels, arguing that promotional reviewing benefits are greatest for independent single-unit hotels and lowest for branded chain hotels. The authors compare hotel reviews on Expedia, where only customers post, to TripAdvisor, where anyone can post, to assess the impact of review posting rules. Hotels with a high incentive to fake have more positive reviews on TripAdvisor relative to Expedia, while their neighboring hotels receive more negative reviews on TripAdvisor compared to Expedia. JEL codes: L15, L83, M31.

Abstract

Firms' incentives to manufacture biased user reviews impede review usefulness. We examine the differences in reviews for a given hotel between two sites: Expedia.com (only a customer can post a review) and TripAdvisor.com (anyone can post). We argue that the net gains from promotional reviewing are highest for independent hotels with single-unit owners and lowest for branded chain hotels with multiunit owners. We demonstrate that the hotel neighbors of hotels with a high incentive to fake have more negative reviews on TripAdvisor relative to Expedia; hotels with a high incentive to fake have more positive reviews on TripAdvisor relative to Expedia. (JEL L15, L83, M31)