Working Paper: NBER ID: w29715
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: online reviews; restaurant hygiene; consumer choice; regulation
JEL Codes: D18; D22; D82; K2; K20; L15; L51; L80; L86
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| hygiene compliance (I18) | likelihood of being sold out (D16) |
| review visibility (Y30) | hygiene compliance (I18) |
| Yelp visibility (D49) | hygiene compliance (I18) |
| Yelp visibility (D49) | likelihood of violating hygiene standards (J81) |
| hygiene signals from Yelp reviews (Z30) | consumer demand (D12) |