Title: Double learning: Who is learning from online reviews?

Authors: Ling He; Ling Liu; Li Qin; Mark McCartney

Addresses: Accounting Department, College of Business and Management, Saginaw Valley State University, 7400 Bay Road, University Center, MI 48710, USA. ' Department of Accounting and Finance, University of Wisconsin at Eau Claire, 105 Garfield Ave. Eau Claire, WI 54702, USA. ' Department of Information Systems and Decision Sciences, Silberman College of Business, Fairleigh Dickinson University, 1000 River Road, Teaneck, NJ 07666, USA. ' Accounting Department, College of Business and Management, Saginaw Valley State University, 7400 Bay Road, University Center, MI 48710, USA

Abstract: Online user reviews have become an important source of information for consumers seeking to make the best purchase decisions possible in an online environment. Based on data collected from the online retailer website Amazon.com, this study explores the potential opportunity provided by online reviews that vendors can use to evaluate their own products and possibly make price adjustments. Using portfolio methodology, this study addresses how vendors view online ratings as quality indicators and how a change in online ratings can lead to an increase or decrease in price. The paper concludes that vendors respond to online reviews of quality and tend to fine tune the price of their products accordingly in order to increase sales revenue.

Keywords: word-of-mouth; online product reviews; portfolio methodology; price adjustment; logistic regression; portfolio methodology; online reviews; user reviews; pricing; Amazon; product evaluation; online ratings; quality indicators; sales revenue.

DOI: 10.1504/IJEB.2011.043256

International Journal of Electronic Business, 2011 Vol.9 No.4, pp.362 - 375

Received: 08 May 2021
Accepted: 12 May 2021

Published online: 22 Oct 2011 *

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