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Reputation Inflation

Author

Listed:
  • Apostolos Filippas

    (Gabelli School of Business, Fordham University, New York, New York 10023)

  • John J. Horton

    (MIT Sloan School of Management, Massachusetts Institute of Technology, Cambridge, Massachusetts 02139; National Bureau of Economic Research, Cambridge, Massachusetts 02138)

  • Joseph M. Golden

    (PerfectRec.com)

Abstract

We show that average buyer ratings of sellers have grown substantially more positive over time in five online marketplaces. Although this increase could by explained by (i) marketplace improvements that increased rater satisfaction, it could also be caused by (ii) “reputation inflation,” with raters giving higher ratings without being more satisfied. We present a method to decompose the growth in average ratings into components attributable to these two reasons. Using this method in one marketplace where we have extensive transaction-level data, we find that much of the observed increase in ratings is attributable to reputation inflation. We discuss the negative informational implications of reputation inflation and consider the likely causes.

Suggested Citation

  • Apostolos Filippas & John J. Horton & Joseph M. Golden, 2022. "Reputation Inflation," Marketing Science, INFORMS, vol. 41(4), pages 733-745, July.
    • Handle: RePEc:inm:ormksc:v:41:y:2022:i:4:p:733-745
    DOI: 10.1287/mksc.2022.1350
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    References listed on IDEAS

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    1. Johnen, Johannes & Ng, Robin, 2023. "Harvesting Ratings," CEPR Discussion Papers 18021, C.E.P.R. Discussion Papers.

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