[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/bon/boncrc/crctr224_2020_143.html
   My bibliography  Save this paper

Pricing for the Stars Dynamic Pricing in the Presence of Rating Systems

Author

Listed:
  • André Stenzel
  • Christoph Wolf
  • Peter Schmidt
Abstract
We study dynamic pricing in the presence of product ratings. A monopolist sells a good of unknown quality to short-lived heterogeneous consumers who observe aggregate ratings reflecting past reviews. Long-run outcomes depend on the sensitivity of the rating system to incoming reviews and the degree to which reviews internalize the purchase price. When internalization is high, low prices induce good reviews. For low internalization, good reviews obtain with high prices via selection on consumer tastes. Sensitivity benefits the seller due to easier ratings management, but may harm consumers by exacerbating upward pricing pressure when internalization is low.

Suggested Citation

  • André Stenzel & Christoph Wolf & Peter Schmidt, 2020. "Pricing for the Stars Dynamic Pricing in the Presence of Rating Systems," CRC TR 224 Discussion Paper Series crctr224_2020_143, University of Bonn and University of Mannheim, Germany.
    • Handle: RePEc:bon:boncrc:crctr224_2020_143
    as

    Download full text from publisher

    File URL: https://www.crctr224.de/research/discussion-papers/archive/dp143
    Download Restriction: no
    ---><---

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Martin, Simon & Shelegia, Sandro, 2021. "Underpromise and overdeliver? - Online product reviews and firm pricing," International Journal of Industrial Organization, Elsevier, vol. 79(C).
    2. Dongwook Shin & Stefano Vaccari & Assaf Zeevi, 2023. "Dynamic Pricing with Online Reviews," Management Science, INFORMS, vol. 69(2), pages 824-845, February.

    More about this item

    Keywords

    Rating Systems; Dynamic Pricing; Asymmetric Information;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bon:boncrc:crctr224_2020_143. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CRC Office (email available below). General contact details of provider: https://www.crctr224.de .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.