Tag Archives: incentives

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

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

  • Presentations: UBC (2021), KrAIS (2021), WISE (2021), PACIS (2022), SCECR (2022), BU Platform (2022), CIST (2022), BIGS (2022)
  • Preliminary version in PACIS 2022 Proceedings

The rapid growth in e-commerce has led to a concomitant increase in consumers’ 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. The literature has examined the direct and indirect effects of incentivized reviews on subsequent organic reviews within consumers who received incentives. However, since incentivized reviews and reviewers are often only a small proportion of a review platform (only 1.2% in our sample), it is important to understand whether their presence and absence on the platform affect the organic reviews from other reviewers who have not received incentives, which are often in the majority. We theorize two underlying effects that incentivized reviews can generate on other organic reviews: the herding effect from imitating incentivized reviews and the disclosure effect from the increased trust or skepticism by explicit incentive disclosure statements. Those two effects make organic reviews either follow or deviate from incentivized reviews. Using Bidirectional Encoder Representations from Transformers (BERT) to identify incentivized reviews and a natural experiment caused by a policy change on Amazon.com in October 2016, we conduct difference-in-differences with propensity score matching analyses to identify the effects of banning incentivized reviews on organic reviews. Our results suggest the disclosure effects are salient: banning incentivized reviews has positive effects on organic reviews in terms of frequency, sentiment, length, image, and helpfulness. Moreover, we find that the presence of incentivized reviews has poisoned the well for organic reviews regardless of the incentivized review ratio and that the effect is heterogeneous to product quality uncertainty. Our findings contribute to the literature on online review and platform design and provide insights to platform managers.

Designing an Incentive-Based Framework for Overlay Routing (Technical Report 2007)

Lee, G. M., Choi, T., and Zhang, Y. (2007). Designing an Incentive-Based Framework for Overlay Routing. UTCS Technical Report, January 2007.

Overlay routing becomes popular as an incremental mechanism to improve internet routing. So far, overlay nodes are always assumed to cooperate with each other. In this paper, we analyze overlay routing in a new viewpoint, in which the overlay nodes act independently to maximize their own payoff. We use a game-theoretic approach to analyze the transit traffic forwarding and realize that overlay nodes are not likely to cooperate with each other in our new scenario.

In order to stimulate the independent overlay nodes to cooperate with each other, we design and propose an incentive-based framework. We introduce three possible systems and evaluate them analytically. Among the candidates, we use simulation to verify the feasibility of our proposed framework generalized punish-and-reward system. The performance gets closer to social optimum as we increase the number of punishments. In addition, the system shows tolerance against impatient players.