On the Uncertain Accuracy of Seller-Provided Information in the Presence of Online Reviews

With the development of the Internet, online reviews play a more important role than ever. We study the impact of online reviews on a seller’s information provision strategy regarding product quality. The accuracy of the seller-provided information can be uncertain. Yet the presence of online reviews can resolve such uncertainty. We find that the seller can benefit from a greater capability in supplying more accurate information. We also find that online reviews do not always improve the seller’s expected profit and the uncertainty of the signal accuracy is not always unfavorable to the seller.