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Institutional Affiliation: Duke University
NBER Working Papers and Publications
|November 2017||Fast and Slow Learning From Reviews|
with Daron Acemoglu, Azarakhsh Malekian, Asuman Ozdaglar: w24046
This paper develops a model of Bayesian learning from online reviews, and investigates the conditions for asymptotic learning of the quality of a product and the speed of learning under different rating systems. A rating system provides information about reviews left by previous customers. A sequence of potential customers decide whether to join the platform. After joining and observing the ratings of the product, and conditional on her ex ante valuation, a customer decides whether to purchase or not. If she purchases, the true quality of the product, her ex ante valuation, an ex post idiosyncratic preference term and the price of the product determine her overall satisfaction. Given the rating system of the platform, she decides to leave a review as a function of her overall satisfaction....