Why Do Product Prices Affect Review Ratings? Evidence from a Japanese Online Travel Agency

I examine why the prices that consumers pay influence their ratings of products. In the context of hotel reviews on an online booking platform, I find that prices have larger impact on ratings when consumers face larger uncertainty about hotel quality, indicating that prices affect satisfaction through consumers’ quality expectation. On the other hand, I find that the mere fact that the reviewer received higher surplus through a lower price by itself is not a primary reason for a higher rating. I also present suggestive evidence of consumer reciprocation, in which consumers experiencing a high-quality staff service likely become more forgiving of higher prices. I show that introductory pricing can have a substantial impact on the distribution of review rankings among new entrants because of the role of prices as quality signals. Understanding the price effect on ratings is crucial to designing review systems robust to potential distortion. This paper was accepted by Raphael Thomadsen, marketing. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2024.05043 .