Consumer Reviews and Regulation: Evidence from NYC Restaurants

Chiara Farronato and Georgios Zervas

No 29715, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We investigate the informativeness of hygiene signals in online reviews, and their effect on consumer choice and restaurant hygiene. We first extract signals of hygiene from Yelp. Among all dimensions that regulators monitor through mandated restaurant inspections, we find that reviews are more informative about hygiene dimensions that consumers directly experience - food temperature and pests - than other dimensions. Next, we find causal evidence that consumer demand is sensitive to these hygiene signals. We also find suggestive evidence that restaurants that are more exposed to Yelp are cleaner along dimensions for which online reviews are more informative.

JEL-codes: D18 D22 D82 K2 K20 L15 L51 L80 L86 (search for similar items in EconPapers)
Date: 2022-02
New Economics Papers: this item is included in nep-ind and nep-reg
Note: IO PR
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Citations: View citations in EconPapers (1)

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