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Dynamic trends in online product ratings: A diagnostic utility explanation

Fang Wang, Kalyani Menon and Chatura Ranaweera

Journal of Business Research, 2018, vol. 87, issue C, 80-89

Abstract: We propose and test an alternative diagnostic utility explanation for trends in customer ratings of products on online reviews/ratings sites. Ratings by prior customers provide key diagnostic information to help prospective customers in their purchase decision. The outcomes of these purchase decisions are reflected in the ratings posted by these later customers. Therefore, rating trends depend on the diagnostic utility of the ratings environment. We suggest that this diagnostic utility is a function of the degree of heterogeneity in the ratings environment and customer diagnostic ability. Using two data sets - from Landsend.com and from Amazon.com, we show a predominant increasing rating trend and support for our diagnostic utility explanation. Ratings show an increasing trend unless heterogeneity in the ratings environment increases and customer diagnostic ability decreases.

Keywords: Online word of mouth; Product reviews; Rating sequences; Dynamic trends; Diagnostic utility; Customer engagement (search for similar items in EconPapers)
Date: 2018
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