Thursday, August 8, 2013

Study: How online ratings affect consumer judgment

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A new study co-authored by an MIT professor suggests that many people are heavily influenced by the positive opinions other people express online — but are much less swayed by negative opinions posted in the same venues. Certain topics, including politics, see much more of this "herding" effect than others.

The results, published in the journal Science, detail a five-month experiment conducted on a major news-aggregation web site. The research group systematically altered the favorability ratings given to certain comments on the site, to see how perceptions of favorability affected people's judgment about those comments. They found that comments whose ratings were manipulated in a favorable direction saw their popularity snowball, receiving a 25 percent higher average rating from other site users.

"This herding behavior happens systematically on positive signals of quality and ratings," says Sinan Aral, an associate professor at the MIT Sloan School of Management, and one of three authors of the study. At the same time, Aral notes, the results "were asymmetric between positive and negative herding." Comments given negative ratings attracted more negative judgments, but that increase was drowned out by what the researchers call a "correction effect" of additional positive responses.

"People are more skeptical of negative social influence," Aral says. "They're more likely to 'correct' a negative vote and give it a positive vote."

While this phenomenon of social positivity sounds pleasant enough on the surface, Aral warns that there are pitfalls to it, such as the manipulation of online ratings by some political operatives, marketers or anyone who stands to profit by creating an exaggerated appearance of popularity.

"These positive ratings also represent bias and inflation," Aral says. "The housing bubble was a spread of positivity, but when it burst, some people lost their savings and their houses went underwater. Stock bubbles represent a positive herding, and they can be dramatically bad in the wrong context."

Still, the experiment also revealed topical limitations in herding: Stories under the rubrics of "politics," "culture and society" and "business" generated positive herding, but stories posted under the topics of "economics," "IT," "fun" and "general news" did not.

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