Feng (Oliver) Liu

(California State University-Sacramento, CA 95819, USA)

 

 

Abstract: The growth in the collection and display of consumer ratings has led to concerns regarding their reliability and quality. In this paper, we propose and test a theory incorporating subjective well-being, altruism, egoism, and human capital, to analyze the differences in the quality of reviews by different consumers. The key proposition of our theory is that those who are high in subjective well-being should have altruistic motivations while those who are low would have egoistic ones. Subsequently, altruistic reviewers would build and use the product-related human capital necessary to provide product reviews that can be reliably used by others. In contrast, reviewers who are egoistic would not be as motivated as altruists to put in the effort to build and use product-related human capital. Thus, differences in the reliability of reviews should parallel differences in subjective well-being: those who are higher on this attribute should provide more reliable reviews than those who are lower. We use data collected via a large-scale online survey to empirically test different parts of our theory. Discrete choice models with MCMC estimation are developed for analysis. The results support our expectations. Managerial implications are discussed.

 

 

Key words: online reviews; SWB; human capital; choice modeling; MCMC

 

JEL code: M310