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Information Cascades — Fake Online Reviews

When people are connected to a network, they tend to be influenced by each other’s behavior and decisions. Information cascades happen when individuals choose to imitate the choices of others even if their own information suggests alternative options. In real life, information cascades happen a lot through online review system from which consumers can evaluate the quality of products or services based on other users’ experience. Nowadays, online shoppers rely heavily on reviews from websites like Amazon and Yelp. However, can we always trust online reviews?

It is undeniable that fake reviews do exist. In professor Chevalier’s study, she compared two major hotel reviews sites TripAdvisor.com and Expedia.com. As TripAdvisor allows anyone to post a review of a hotel and Expedia only permits those who have actually booked a room at the hotel to write review, research shows that indeed more inaccurate reviews have appeared on TripAdvisor. One reason is that some business owners may post biased negative reviews to their competitors. As a result, on some websites, about 10% reviews can be fake and mislead consumers. As online reviews do influence people’s decisions, it is important for those review websites to come up with solutions to exclude fake reviews. Otherwise, through information cascades, more and more people would be misled and make bad judgements.

http://insights.som.yale.edu/insights/can-online-reviews-be-trusted

 

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