Many consumers post on-line reviews, affecting the average evaluation of products and services.Yet, little is known about the importance of the number of reviews for consumer decision making. We conducted an on-line experiment (n=168) to assess the joint impact of the average evaluation, a measure of quality, and the number of reviews, a measure of popularity, on hotel preference. The results show that consumers' preference increases with the number of reviews, independently of the average evaluation being high or low. This is not what one would expect from an informational point of view, and review websites fail to take this pattern into account. This novel result is mediated by demographics: young people, and in particular young males, are less affected by popularity, relying more on quality. We suggest the adoption of appropriate ranking mechanisms to fit consumer preferences.
INTRODUCTIONThe way in which both software developers and consumers use the Internet is continuously changing towards an increasing management of user-generated content. This "collaborative" vision of the web, promoting a place where users can interact and share information, was coined about a decade ago with the term Web 2.0. Examples of Web 2.0 include social networks, video-sharing sites, fora, wikis, blogs, and other sites managing user-generated information. In this dynamic world of on-line marketing, the traditional influence of word-of-mouth has been fiercely amplified by the impressions from consumers posting their experience with products and services in social media websites.Since Amazon.com Inc. started posting customer ratings and product reviews in 1995, most on-line businesses have realized that allowing customers to post reviews can increase sales and help suppliers 2 identify problems with their products and services. These information tools are being used by consumers who increasingly search and read comments and reviews from peers, facilitating choices and purchase decisions. In its last Trust Barometer 2013, the public-relations firm Edelman asked survey respondents across 20 countries how credible the information about a company was, depending on the informer. A total of 61% of respondents attributed high credibility to "a person like yourself", compared to only 49% to "regular employees" and 40% to "the company's CEO". A previous survey conducted in 2011 by the public-relations firm Weber Shandwick, found that traditional word-of-mouth (88%) and on-line reviews (83%) ranked as top factors, being "very" or "somewhat" influential on consumer perceptions about companies.Within the service sector, travel is one of the fastest growing industries in e-commerce spending.ComScore Inc, a global research firm that tracks on-line traffic, reported that the travel category attracted 124 million visitors in January 2012, with an increase of 8% with respect to the previous year.All the above phenomena combine in the form of travel review websites, revolutionizing the manner in which word-of-mouth opinions and recommendati...