Working Paper: NBER ID: w10148
Authors: Judith A. Chevalier; Dina Mayzlin
Abstract: We examine the effect of consumer reviews on relative sales of books on Amazon.com and BarnesandNoble.com. We find that 1) reviews are overwhelmingly positive at both sites, but there are more reviews and longer reviews at Amazon.com, 2) an improvement in a book's reviews leads to an increase in relative sales at that site, and 3) the impact of 1-star reviews is greater than the impact of 5-star reviews. The results suggest that new forms of customer communication on the Internet have an important impact on customer behavior.
Keywords: word of mouth; consumer reviews; sales; online retail; Amazon; Barnes & Noble
JEL Codes: L1; L8; M3
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Improvement in book's reviews (Y30) | Increase in relative sales at the site where reviews are posted (L81) |
| 1-star reviews (Y30) | Greater impact on consumer behavior than 5-star reviews (F61) |
| Negative review on Amazon (Y30) | Decrease in market share of that book on Amazon relative to Barnes & Noble (D49) |