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

For Women in Economics, the Hostility Is Out in the Open

02.23.2021

Two papers by Dr. Venkatesan and students published

02.17.2021

Plenary session by Dr. Venkatesan March 5 on life-cycle thinking

03.02.21
All Stories