The danger of firms manipulating Internet-based opinion forums by posting anonymous messages praising their products is the subject of a paper in the Management Insights section of the October issue of Management Science, the flagship journal of the Institute for Operations Research and the Management Sciences (INFORMS®).
Management Insights, a new monthly feature of the journal, is a digest of important research in business, management, operations research, and management science. It appears in every issue of the monthly journal.
Strategic Manipulation of Internet Opinion Forums: Implications for Consumers and Firms by Chrysanthos Dellarocas examines policy decisions (is Internet forum manipulation socially harmful?), R&D decisions (does it pay to invest in technologies that discourage online manipulation? Who should bear the cost of such investments?), and firm and consumer attitudes towards Internet forums (how much should consumers trust online forums? How much should firms invest in trying to manipulate them?).
There is growing evidence that consumers are influenced by Internet-based opinion forums before making a variety of purchase decisions. Firms whose products are being discussed in such forums are, therefore, tempted to manipulate consumer perceptions by posting anonymous messages that praise their products (or by providing incentives to consumers to do so). In this paper, we analyze the impact of such behavior on firm profits and consumer surplus. Our results are relevant to policy decisions (is Internet forum manipulation socially harmful?), R&D decisions (does it pay to invest in technologies that discourage online manipulation? who should bear the cost of such investments?) and, firm and consumer attitudes towards Internet forums (how much should consumers trust online forums? how much should firms invest in trying to manipulate them?). The models and results of this paper also apply to the, increasingly popular, online “word-of-mouth marketing” campaigns in which paid individuals circulate large cities, endorsing a firm’s products to strangers as if they were expressing their personal opinions.
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