Reputation inflation
Apostolos Filippas, John J. Horton, Joseph Golden
Published: Marketing Science 41(4): 733-745 (2022)
Last updated: 2022-07
Summary
A solution to marketplace information asymmetries is to have trading partners publicly rate each other post-transaction. Many have shown that these ratings are effective; we show that their effectiveness can deteriorate over time. The problem is that ratings are prone to inflation, with raters feeling pressure to leave “above average” ratings, which in turn pushes the average higher. This pressure stems from raters’ desire to not harm the rated seller. As the potential to harm is what makes ratings effective, reputation systems, as typically designed, become less informative in the long-run.
Paper links
PDF · mktscience · NBER · ACM EC · repec · SSRN
Video
Coverage
Let gig economy workers control their data too, Financial Times Good luck leaving your Uber driver less than 5 stars, Quartz Giving Your Uber Driver 5 Stars Isn’t Helping Anyone, Fortune Five-star rating? New research finds it may not reflect what consumers receive, EurekAlert
Cite
@article{horton2022reputationinflation,
title = {{Reputation Inflation}},
author = {Filippas, Apostolos and Horton, John J. and Golden, Joseph},
journal = {Marketing Science},
year = {2022},
volume = {41},
number = {4},
pages = {733-745},
doi = {10.1287/mksc.2022.1350},
url = {https://doi.org/10.1287/mksc.2022.1350}
}