Strategic Manipulation of Internet Opinion Forums: Implications for Consumers and Firms

There is growing evidence that consumers are influenced by Internet-based opinion forums before making a variety of purchase decisions. Firms whose products are being discussed in such forums are, therefore, tempted to try to manipulate consumer perceptions by posting costly anonymous messages that praise their products or by offering incentives to consumers to do so. This paper offers a theoretical analysis of the impact of such behavior on firm profits and consumer surplus. We examine a setting where two firms simultaneously introduce imperfect substitute experience goods of different qualities and consumers obtain quality information from an online forum. The most striking result of our analysis is that strategic manipulation can either decrease or increase the information value of online forums to consumers relative to the case where no manipulation takes place. Specifically, there exist settings where the presence of honest consumer opinions induces firms to reveal their own, mor...

• Type: Journal
• Year: 2006
• Where: MANSCI
• Authors: Chrysanthos Dellarocas
• Keywords: Costly Anonymous Messages, Honest Consumers, MANSCI 2006, Online Forums