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The Effect of Information Salience on Product Quality: Louisville Restaurant Hygiene and Yelp.com

Matthew Makofske

MPRA Paper from University Library of Munich, Germany

Abstract: In late June 2013, the city of Louisville, Kentucky, announced plans to provide restaurant health inspection data to Yelp.com for publication on their popular online consumer-review forum. These data were already publicly available on the city's website. I utilize this partnership to test whether an increase in the salience of disclosed quality information on a particular product attribute, induces sellers to improve product quality along that dimension. Consumers use Yelp to gather information on many characteristics of a restaurant's product. Consumers depend less on Yelp to learn about chain-affiliated restaurants, because much of this information is conveyed through the chain's reputation. Using data from over 11,000 Louisville restaurant health inspections, I compare health inspection performance for independent and chain-affiliated restaurants, before and after the announcement of the partnership. Controlling for a variety of factors, I estimate that this increased salience caused substantial improvement in independent restaurant hygiene. The average treatment effect is estimated to be a 12-14% decrease in health score point deductions, and a 29-37% decrease in critical violations (those deemed to be the greatest public health risk), per inspection. The effect of the Louisville-Yelp partnership on health score point deductions is entirely evident in restaurants' first inspections following its announcement, where the estimated effect is a 14-16% relative decrease.

Keywords: cost of information acquisition; salience; mandatory disclosure; product quality; restaurant hygiene (search for similar items in EconPapers)
JEL-codes: I18 K32 L15 (search for similar items in EconPapers)
Date: 2017-01-13
New Economics Papers: this item is included in nep-law and nep-mkt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: The Effect of Information Salience on Product Quality: Louisville Restaurant Hygiene and Yelp.com (2020) Downloads
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