Unraveling the Information Role of Online Reviews: Distinguishing between the Competing Effect, Local and Global Peer Effects on Consumer Choice
نویسندگان
چکیده
This study examines the information role of online reviews on competing products and from local and global peers on consumers’ choice of products. By empirically analyzing a data set from a restaurant review website, we find that a one unit increase in average valence (volume) of spatially adjacent and feature similar alternatives reduces the odds of choosing a focal product by 92.0% (66.6%) and by 72.2% (45.8%) respectively. Competition faced by restaurants, in terms of review valence and volume, is thus stronger along geographical space, rather than characteristics space. The valence, volume and dispersion of valences of reviews posted by local peers are found to have influences on purchase decisions. Importantly, local peer effects exert more significant influences on consumer choices as compared to global peer effects. These new findings on the dimensions of competition, local and global peer effects of online reviews provide implications for academic research and practice.
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