Histogram Distortion Bias in Consumer Choices

Tao Lu (), May Yuan (), Chong (Alex) Wang () and Xiaoquan (Michael) Zhang ()
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Tao Lu: Department of Information Systems & Management Engineering, Southern University of Science and Technology, Shenzhen, China
May Yuan: Department of Marketing, CUHK Business School, Chinese University of Hong Kong, Hong Kong, China
Chong (Alex) Wang: Guanghua School of Management, Peking University, Beijing, China
Xiaoquan (Michael) Zhang: Department of Management Science and Engineering, School of Management and Economics, Tsinghua University, Beijing, China; Department of Decision Sciences and Managerial Economics, CUHK Business School, Chinese University of Hong Kong, Hong Kong, China

Management Science, 2022, vol. 68, issue 12, 8963-8978

Abstract: Existing research on word-of-mouth considers various descriptive statistics of rating distributions, such as the mean, variance, skewness, kurtosis, and even entropy and the Herfindahl-Hirschman index. But real-world consumer decisions are often derived from visual assessment of displayed rating distributions in the form of histograms. In this study, we argue that such distribution charts may inadvertently lead to a consumer-choice bias that we call the histogram distortion bias (HDB). We propose that salient features of distributions in visual decision making may mislead consumers and result in inferior decision making. In an illustrative model, we derive a measure of the HDB. We show that with the HDB, consumers may make choices that violate well-accepted decision rules. In a series of experiments, subjects are observed to prefer products with a higher HDB despite a lower average rating. They could also violate widely accepted modeling assumptions, such as branch independence and first-order stochastic dominance.

Keywords: online ratings; online word-of-mouth; histogram; graphical decision support; decision bias; decision under uncertainty (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:68:y:2022:i:12:p:8963-8978

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