Manipulation of Cursed Beliefs in Online Reviews

Ludmila Matyskova and Jan Sipek

CERGE-EI Working Papers from The Center for Economic Research and Graduate Education - Economics Institute, Prague

Abstract: Consumer reviews may have perverse effects, including delays of adoption in new products of unknown quality when consumers are boundedly rational. When consumers fail to take into account that past reviewers self-select to purchases, a monopolist may manipulate the posterior beliefs of consumers who observe the reviews, because the product price determines the self-selection bias. The monopolist will charge a relatively high price because the positive selection of the early adopters increases the quality reported in the reviews.

Keywords: cursed equilibrium; online social learning; two-sided learning (search for similar items in EconPapers)
JEL-codes: D42 D82 D83 L15 (search for similar items in EconPapers)
Date: 2017-04
New Economics Papers: this item is included in nep-com, nep-mic and nep-mkt
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.cerge-ei.cz/pdf/wp/Wp586.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cer:papers:wp586

Access Statistics for this paper

More papers in CERGE-EI Working Papers from The Center for Economic Research and Graduate Education - Economics Institute, Prague Contact information at EDIRC.
Bibliographic data for series maintained by Lucie Vasiljevova ().