Online Review for Service: A Bless or Curse?

Description

The researches on online reviews are extant in the recent years, while the reviews for services receive little attention. Given the fast development of service economy, especially the development of shared economy where mostly services, including driving services (Uber and DiDi) and medical services (Haodf.com, Chunyu Doctor) or housing services (Airbnb) are transacted, it becomes crucial to evaluate whether our understanding of online review on commodities (such as reviews provided on Amazon.com or Taobao.com) can be applied to service products. Service products have certain unique features that distinguish them from commodity products: (1) the outcome of the service depends on not only the service provider, but also the customer who receives the service. For example, whether or not a disease could be cured depends not only on the doctor’s effort, but also the complexity of the disease and the patient’s own health conditions; (2) service providers, in many scenarios, are able to decide which customers to serve. Such features make it difficult to interpret the service provider’s quality from the review outcome, and inappropriate to interpret the reviews for service the same way as the review for commodity products. This project first proposes a theoretical framework to understand how the reviews for service products are different from those for commodity products. We examine whether, and under what conditions, online reviews for service products can truly reflect the quality of the service provider. We find that reviews for service help differentiate service providers with different quality levels to a certain degree, but not always. Moreover, if the service provider is allowed to select customers to pursue a better review outcome, there exists a deadweight loss in the social welfare where customers who are less likely to produce desirable review outcomes will not be served. We examine the effectiveness of two policies in reducing the deadweight loss. We are also in the process of collecting data from both an online medical service provider and two large offline hospitals to examine whether online reviews help reducing the uncertainties for doctor’s quality, and whether online reviews provide consistent evaluation for the doctors’s offline profile.