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Do expert reviews really drive demand? Evidence from a German car magazine

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  • Ralf Dewenter
  • Ulrich Heimeshoff

Abstract

A wide range of media provide information on many products based on reviews or expert opinions. A natural question is, whether these reviews and expert opinions have any effect on sales. A small but growing literature in economics and marketing science deals with this issue, by testing the relevance of such product information for goods such as financial instruments, wine, books and movies. However, most of these products have in common that quality is very difficult to measure. It is always also a matter of taste whether these products can be seen as high- or low-quality goods. Based on a unique data set, we test whether test scores published in a major German car magazine have significant impact on registrations of new cars in Germany. We find that test scores for certain cars have statistically significant impact on the number of new cars sold by several leading manufacturers on the German car market.

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  • Ralf Dewenter & Ulrich Heimeshoff, 2015. "Do expert reviews really drive demand? Evidence from a German car magazine," Applied Economics Letters, Taylor & Francis Journals, vol. 22(14), pages 1150-1153, September.
    • Handle: RePEc:taf:apeclt:v:22:y:2015:i:14:p:1150-1153
    DOI: 10.1080/13504851.2015.1011304
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    Cited by:

    1. Dewenter, Ralf & Heimeshoff, Ulrich, 2015. "More ads more revs: A note on media bias in review likelihood," Economic Modelling, Elsevier, vol. 44(C), pages 156-161.
    2. Tom Hamami, 2019. "Network Effects, Bargaining Power, and Product Review Bias: Theory and Evidence," Journal of Industrial Economics, Wiley Blackwell, vol. 67(2), pages 372-407, June.
    3. Tom Hamami & James Bailey, 2021. "Expert product reviews and conflict of interest," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(1), pages 170-176, January.
    4. Dieter Pennerstorfer & Christoph Weiss & Andreas Huber, 2019. "Experts, Reputation and Umbrella Effects: Empirical Evidence from Wine Prices," Economics working papers 2019-08, Department of Economics, Johannes Kepler University Linz, Austria.
    5. Daniel Kaimann, 2020. "Behind the Review Curtain: Decomposition of Online Consumer Ratings in Peer-to-Peer Markets," Sustainability, MDPI, vol. 12(15), pages 1-17, July.
    6. Sendhil Mullainathan & Andrei Shleifer, 2005. "The Market for News," American Economic Review, American Economic Association, vol. 95(4), pages 1031-1053, September.

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    More about this item

    JEL classification:

    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media

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