Bad News Turned Good: Reversal Under Censorship

Publikation: Bidrag til tidsskriftTidsskriftartikelForskningfagfællebedømt

Dokumenter

Sellers often have the power to censor the reviews of their products. We explore the effect of these censorship policies in markets where some consumers are unaware of possible censorship. We find that if the share of such “naive” consumers is not too large, then rational consumers treat any bad review that is revealed in equilibrium as good news about product quality. This makes bad reviews worth revealing and allows the seller to use them as a costly signal of his product's quality to rational consumers.
OriginalsprogEngelsk
TidsskriftAmerican Economic Journal: Microeconomics
ISSN1945-7669
DOI
StatusAccepteret/In press - 2020

ID: 243478925