Self-selection and information role of online product reviews

摘要

A model is developed to examine how idiosyncratic preferences of early buyers can affect long-term consumer purchase behavior and to explain the structure of the product ratings over time, which is tested empirically using online book reviews posted on amazon.com. Accordingly, firms could benefit from altering their marketing strategies such as pricing, advertising or product design to encourage consumers to yield positive reports to self-select into the market early and generate positive word-of-mouth for new products. On the other hand, self-selection bias reduces consumer surplus.