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Examining the Relationship Between Reviews and Sales: The Role of Reviewer Identity Disclosure in Electronic Markets

Authors: Forman, Chris
Ghose, Anindya
Wiesenfeld, Batia
Keywords: digital markets;information processing;social identity;online reviews;internet retailing;virtual communities;identity disclosure;user-generated content
Issue Date: 6-Nov-2008
Series/Report no.: CeDER-PP-2008-01
Abstract: Consumer-generated product reviews have proliferated online, driven by the notion that consumers’ decision to purchase or not purchase a product is based on the positive or negative information about that product they obtain from fellow consumers. Using research on information processing as a foundation, we suggest that in the context of an online community, reviewer disclosure of identity-descriptive information is used by consumers to supplement or replace product information when making purchase decisions and evaluating the helpfulness of online reviews. Using a unique data set based on both chronologically compiled ratings as well as reviewer characteristics for a given set of products and geographical location-based purchasing behavior from Amazon, we provide evidence that community norms are an antecedent to reviewer disclosure of identity-descriptive information. Online community members rate reviews containing identity-descriptive information more positively, and the prevalence of reviewer disclosure of identity information is associated with increases in subsequent online product sales. In addition, we show that shared geographical location increases the relationship between disclosure and product sales, thus highlighting the important role of geography in electronic commerce. Taken together, our results suggest that identity-relevant information about reviewers shapes community members’ judgment of products and reviews. Implications for research on the relationship between online word-of-mouth (WOM) and sales, peer recognition and reputation systems, and conformity to online community norms are discussed
Appears in Collections:CeDER Published Papers

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