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Arindam Chaudhuri, Editor-in-Chief, 4Ps B&M Chief Consulting Editor's Desk
Rajita Chaudhuri
Arindam Chaudhuri, Editor-in-Chief, 4Ps B&M Editor-in-Chief
Dr. Arindam Chaudhuri
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INTERNATIONAL COLUMN
Fakery of the Crowds: Can you trust online reviews?
Yaniv Dover, Faculty of Business Administration at Tuck School of Business, shows which online hotel reviews are more likely to be fake, and why
 
It seems like a simple question: Can you trust online reviews?

In reality, however, it’s tough to answer. That’s because “promotional” reviews – those designed not to rate an experience or a product, but slyly burnish a company’s brand or deface a competitor’s – are not meant to be detected, and distinguishing the true from the false is a difficult task.

Yet making that distinction is important, since online reviews have a significant effect on consumers’ purchases. Computer scientists have created algorithms to identify fraudulent reviews, but with little success. I have tried to address the question from a different angle.

I and my research colleagues Dina Mayzlin (Associate Professor of Marketing at the USC Marshall School of Business) and Judith Chevalier (William S. Beinecke Professor of Finance and Economics at the Yale school of Management) studied reviews from Expedia.com and TripAdvisor.com, two hotel review sites that have an important difference: anyone can post a review on Trip Advisor, while only consumers who booked at least one night’s stay at a hotel could review it on Expedia. In other words, it’s much easier to write a fake review on Trip Advisor than on Expedia. By examining reviews of the same hotels on both websites, we were able to study the differences in the reviews and measure how hotel characteristics affect the likelihood of review manipulation.

Online reviews have quickly built up a critical mass and gained the power to influence markets, but they are not without problems. For example, in 2004 Amazon.com’s Canadian site experienced a glitch and revealed the true names of anonymous reviewers of books. It turned out that a portion of the glowing book reviews were written by the authors themselves. It’s reasonable to believe the practice has spread to all kinds of products and services.

We wanted to see if online reviews were sustainable, or would they explode at some point and nobody would trust them? When we saw the different platforms of Expedia and Trip Advisor, it looked to us like a natural opportunity for an experiment. This is something rare that we had to exploit. Arranging to study 3,000 hotels would be much harder than just examining these two websites.

We limited our research to reviews of hotels in the 25th to 75th largest US cities, studying 3,082 hotels; 95% of the hotels had reviews on both sites. Our data set consisted of 350,430 reviews on Trip Advisor, and 123,569 on Expedia. The hotels were divided into three categories of organizational form: independent, franchised unit of a chain, or company-owned unit of a chain.

These categories are important because they inform our study’s hypothesis: that the gains from promotional reviewing are likely to be highest for independent hotels. To test this hypothesis, we looked at the ratio of one-star reviews to five-star reviews and compared the different ratios across the range of hotel types and among the two websites. We also looked at the ratio of one-star and two-star reviews to total reviews for chain and franchise hotels that are close geographic neighbours with independent hotels. In other words, we measured whether the neighbours of independent hotels fare worse on Trip Advisor than Expedia.

 
The empirical evidence was consistent with our claims: We found that independent hotels engage in more review manipulation (positive and negative) than franchised and company-owned hotels.

Although that might sound damning, we believe that while the total amount of review manipulation is economically significant, it is still small relative to the total amount of reviewing activity.

The lesson for consumers is clear: the hotel reviews you use to determine where to stay are probably real, but it pays to compare reviews in multiple sites to check for consistency. What we suggest is, if you do have validated and non-validated sites, you can always use the validated site as a checkpoint.
Manish K. Pandey           
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