The Signaling Effect of Critics - Evidence from a Market for Experience Goods

Joe Cox () and Daniel Kaimann ()
Additional contact information
Joe Cox: Portsmouth Business School
Daniel Kaimann: University of Paderborn

No 68, Working Papers CIE from Paderborn University, CIE Center for International Economics

Abstract: Experience goods are characterized by information asymmetry and a lack of ex ante knowledge of product quality, such that credible and reliable external signals of product quality are likely to be highly valued. Due to their independence and expert reputations, professional critics therefore have the potential to significantly influence buyer behavior and hence product demand. In order to empirically verify the influence of critic reviews on market success, we analyze a sample of 1,480 video games and their sales figures between 2004 and 2010. We find strong evidence to suggest that reviews from professional critics have a significant effect upon sales and serve as a signal that helps consumer to overcome uncertainty and support the decision making process. The influence of professional critics on sales is also found to substantially outweigh that of word-of-mouth reviews from other consumers.

Keywords: Signaling Theory; Information Asymmetry; Critics; Video Games (search for similar items in EconPapers)
JEL-codes: C31 D82 L14 L82 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2013-09
New Economics Papers: this item is included in nep-cta, nep-ind and nep-mkt
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://groups.uni-paderborn.de/wp-wiwi/RePEc/pdf/ciepap/WP68.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pdn:ciepap:68

Access Statistics for this paper

More papers in Working Papers CIE from Paderborn University, CIE Center for International Economics Contact information at EDIRC.
Bibliographic data for series maintained by WP-WiWi-Info ( this e-mail address is bad, please contact ) and ().