Do Incentivized Reviews Poison the Well? Evidence from a Natural Experiment at Amazon.com

Park, Jaecheol, Arslan Aziz, Gene Moo Lee (2021) “Do Incentivized Reviews Poison the Well? Evidence from a Natural Experiment at Amazon.comWorking Paper.

  • Presentations: UBC (2021), WISE (2021)

The rapid growth in e-commerce has led to a concomitant increase in consumer’s reliance on digital word-of-mouth to inform their choices. As such, there is an increasing incentive for sellers to solicit reviews for their products. Recent studies have examined the direct effect of receiving incentives or introducing incentive policy on review writing behavior. However, since incentivized reviews are often only a small proportion of the overall reviews on a platform, it is important to understand how their presence on the platform has spillover effects on the unincentivized reviews which are often in the majority. Using a natural experiment caused by a policy change, a ban on the incentivized reviews, on Amazon.com in October 2016, we conducted the difference-in-differences analyses for three different periods after the policy implementation. Our results suggest that there are positive spillover effects on the review sentiment, length, helpfulness, and frequency, suggesting that the policy stimulates more reviews in the short-run, and more positive, longer, and more helpful reviews in the long run.