Combating Fake Reviews over Digital Platforms: An Economic Analysis of Incentive and Liability Mechanisms
摘要
Product reviews have strong influence on customers’ purchase decisions. However, authenticity of these reviews may be compromised due to inflation by online sellers in an e-commerce supply chain. In this paper, we analyze the extent of product review inflation under scenarios where product is offered by third-party seller or platform. Specifically, we consider a model setup where an online platform exerts effort towards detecting review inflation, and consider two mechanisms to combat review inflation: (i) Incentive mechanism, where social planner pays some incentive to the platform if it detects and reports fake reviews, and (ii) Liability mechanism, where platform and third-party seller share the liability cost paid to customers if review inflation is detected. We find that the third-party seller may set higher inflation level under liability mechanism depending on customers’ ability to detect inflation. Furthermore, social planner may need to be more vigilant towards third-party seller compared to platform.