Highlights - July 2016

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According to a new University of Colorado Boulder study, the belief that online user ratings are good indicators of product quality is largely an illusion.

Yet, as explained in the paper published recently in the Journal of Consumer Research, almost all retailers provide user ratings on their websites and many consumers rely on the information when making purchase decisions.

For the study, the researchers examined user ratings for 1,272 products across 120 product categories, such as car seats, bike helmets, sunblock, air filters, smoke alarms and blood pressure monitors.  Their analyses show a very low correspondence between average user ratings of products on Amazon.com and product ratings, based on objective tests, found in Consumer Reports.

In fact, they discovered that the likelihood that an item with a higher user rating performs objectively better than an item with a lower user rating is only 57 percent.  Since a correspondence of 50 percent would be random, it’s safe to say user ratings provide very little insight about objective product performance.

In addition, the study found that user ratings do not predict the resale value of used products, either.  Products with better reliability and performance retain more of their value over time.  If average user ratings reflect objective quality, they should correlate positively with resale values. The fact that they don’t casts more doubt on the validity of user ratings.

The study also examined what information consumers rely on when judging the quality of products on Amazon.com.  Not surprisingly, consumers rely very heavily on the average user rating, which is presented front and center.  They do this regardless of whether the average rating is based on a small or a large sample of consumers.

That’s a mistake.  Often, there are just not enough ratings for a product or there is too much disagreement among reviewers. In that case, consumers should not trust the average very much, but they do nonetheless.

In light of their findings, the authors recommend consumers be more cautious when they make inferences about product quality based on user ratings.

Accurately evaluating product performance is not an easy task.  Different alternatives need to be...

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