Reputation Inflation

Apostolos Filippas (), John J. Horton () and Joseph M. Golden ()
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Apostolos Filippas: Gabelli School of Business, Fordham University, New York, New York 10023
John J. Horton: MIT Sloan School of Management, Massachusetts Institute of Technology, Cambridge, Massachusetts 02139; National Bureau of Economic Research, Cambridge, Massachusetts 02138
Joseph M. Golden: PerfectRec.com

Marketing Science, 2022, vol. 41, issue 4, 733-745

Abstract: We show that average buyer ratings of sellers have grown substantially more positive over time in five online marketplaces. Although this increase could by explained by (i) marketplace improvements that increased rater satisfaction, it could also be caused by (ii) “reputation inflation,” with raters giving higher ratings without being more satisfied. We present a method to decompose the growth in average ratings into components attributable to these two reasons. Using this method in one marketplace where we have extensive transaction-level data, we find that much of the observed increase in ratings is attributable to reputation inflation. We discuss the negative informational implications of reputation inflation and consider the likely causes.

Keywords: online marketplaces; reputation systems; market design (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (4)

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