Incentives to misrepresent

Hotel Reviews Online: In Bed With Hope, Half-Truths and Hype – New York Times
The NYT discusses an increasing problem with informal review and recommendation sites: insincere or misleading postings. Here, they talk about hotels that either post fake (positive) reviews about themselves, or that offer inducements (discounts, etc.) to customers to post positive reviews, or that bribe web sites and blogs to remove negative reviews.


The Times suggests this is not a problem for professional reviewers in the traditional media, but of course that’s horse manure: restaurant critics who are spotted get special treatment, book and movie reviewers are offered inducements. The “payola” scandals in broadcast radio are famous (and ongoing).
Chris Dellarocas has written a paper about this (motivated in part by revelations about a year ago that Amazon’s book review system was being scammed by authors and publishers).
Where is the ICD in this? Well, for starters, those with an interest in the outcome are offering incentives to induce (misleading) behavior. Which drives home the countervailing incentives problem: how do we discourage low-quality reviews and recommendations, and encourage high quality?
(It may be obvious, but this is another example of the growing world of “spam”: unsolicited communications that are undesired or misleading. They are not pushed into users’ mailboxes, but other than that, how different is it from adds touting the miraculous powers of herbal “viagra”?)

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