Abstract

The manipulation of online consumer reviews (OCRs) became a global phenomenon. Although policymakers require platforms to delete OCRs that are identified as fake, they also urge to consider the principle of freedom of expression before deleting content. Since fake OCR detection algorithms are imperfect, platforms must either balance preventive deletion with preserving free speech, or they can simply tag OCRs that are potentially fake. In this paper, we examine the consequences of the latter. With an incentive-compatible experiment, we observe that tagging fake OCRs harms all relevant consumer trust dimensions. Contrary to our expectations, tags do not serve as a trust-increasing signal for the platform as a signal provider. They do, however, not only directly harm consumers’ trust in OCRs and reviewers, but also indirectly via the activation of consumers’ persuasion knowledge. Although consumer trust decreases, we find no negative economic consequences for the platform from tagging potential fake OCRs.

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