Essays on Online Review Manipulation and Sponsored Search Advertising

Online reviews have been found to be important drivers for consumer’s purchase decisions. Many firms resort to online review manipulations in the hope to improve their revenues. Manipulated online reviews have been acknowledged as a critical challenge in the e-commerce industry. Two essays in my dissertation are in the domain of online review manipulation in the hotel industry. In the first essay, I study how a new type of competition from the sharing economy (specifically Airbnb.com), impacts how hotels manipulate reviews. Surprisingly, I find that hotels demote their competitors less in the presence of higher levels of Airbnb competition. For self-promotion, Airbnb’s impact varies across hotel types – high-end hotels intensify self-promotion activities while low-end hotels make no change. In the second essay, I study the economic effectiveness of different review manipulation strategies. I find that high-end hotels indeed benefit from self-promotion and are hurt from getting demoted by other hotels. Moreover, the negative impact of getting demoted is stronger for low-end hotels than for high-end hotels.

My third essay is in the sponsored search advertising domain. I draw on the theory of strategic groups to investigate how advertisements from firms within such groups impact consumers’ clickstream behavior when viewing sponsored search results. I find a strong positive externality for within-group competitors relative to across-group competitors. My findings contribute to the sponsored search literature by theorizing and empirically verifying consumers’ search behaviors from the strategic group perspective.