Skip to content
Stories

Paper by Reimers and Waldfogel forthcoming in AER

“Digitization and Pre-Purchase Information: The Causal and Welfare Impacts of Reviews and Crowd Ratings”

forthcoming in the American Economic Review

Abstract

Digitization has led to many new creative products, straining the capacity of professional critics and consumers. Yet, the digitization of retailing has also delivered new crowd-based sources of pre-purchase information. We compare the relative impacts of professional critics and crowd-based Amazon star ratings on consumer welfare in book publishing. Using various fixed effects and discontinuity-based empirical strategies, we estimate their causal impacts on sales. We use these causal estimates to calibrate a structural demand model. The aggregate effect of star ratings on consumer surplus is, in our baseline estimates, more than ten times the effect of traditional review outlets.

More Stories

Bilge Erten presents at NBER meeting

06.04.2021

COVID-19 IS MORE DANGEROUS FOR OLDER PEOPLE. BUT WHAT ABOUT LOCKING DOWN ALONE?

06.04.2021

New Paper by Bilge Erten on the effects of education on intimate partner violence

06.07.21
news