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The logic of collective rating


Nax, Heinrich H (2016). The logic of collective rating. Frontiers in Physics:4:15.

Abstract

The introduction of participatory rating mechanisms on online sales platforms has had substantial impact on firms' sales and profits. In this note, we develop a dynamic model of consumer influences on ratings and of rating influences on consumers, focussing on standard five-star mechanisms as implemented by many platforms. The key components of our social influence model are the consumer trust in the “wisdom of crowds” during the purchase phase and indirect reciprocity during the rating decision. Our model provides an overarching explanation for well-corroborated empirical regularities. We quantify the performance of the voluntary rating mechanism in terms of realized consumer surplus with the no-mechanism and full-information benchmarks, and identify how it could be improved.

Abstract

The introduction of participatory rating mechanisms on online sales platforms has had substantial impact on firms' sales and profits. In this note, we develop a dynamic model of consumer influences on ratings and of rating influences on consumers, focussing on standard five-star mechanisms as implemented by many platforms. The key components of our social influence model are the consumer trust in the “wisdom of crowds” during the purchase phase and indirect reciprocity during the rating decision. Our model provides an overarching explanation for well-corroborated empirical regularities. We quantify the performance of the voluntary rating mechanism in terms of realized consumer surplus with the no-mechanism and full-information benchmarks, and identify how it could be improved.

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Additional indexing

Item Type:Journal Article, not_refereed, original work
Communities & Collections:06 Faculty of Arts > Institute of Sociology
Dewey Decimal Classification:300 Social sciences, sociology & anthropology
Uncontrolled Keywords:rating dynamics, social influence, amazon data, voluntary contribution dynamics, wisdom of the crowds
Language:English
Date:4 May 2016
Deposited On:27 Nov 2020 12:21
Last Modified:27 Nov 2020 12:32
Publisher:Frontiers Research Foundation
ISSN:2296-424X
OA Status:Gold
Free access at:Publisher DOI. An embargo period may apply.
Publisher DOI:https://doi.org/10.3389/fphy.2016.00015

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