Working Paper: CEPR ID: DP17102
Authors: Chiara Farronato; Georgios Zervas
Abstract: We investigate the informativeness of hygiene signals in online reviews, and their effect on consumer choice and restaurant hygiene. We first extract signals of hygiene from Yelp. Among all dimensions that regulators monitor through mandated restaurant inspections, we find that reviews are more informative about hygiene dimensions that consumers directly experience - food temperature and pests - than other dimensions. Next, we find causal evidence that consumer demand is sensitive to these hygiene signals. We also find suggestive evidence that restaurants that are more exposed to Yelp are cleaner along dimensions for which online reviews are more informative.
Keywords: regulation; online reviews
JEL Codes: D18; L15; K20
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| restaurant visibility on Yelp (L81) | hygiene compliance (I18) |
| restaurant exposure to Yelp reviews (Z30) | hygiene standards (I19) |
| hygiene signals from Yelp reviews (Z30) | consumer demand (D12) |
| timing of review submission (C41) | consumer demand (D12) |
| hygiene signals from Yelp reviews (Z30) | likelihood of restaurants being sold out (L81) |