The Impact of User Review Volume on Consumers' Willingness to Pay: A Consumer Uncertainty Perspective
Numerous studies have investigated the impact of review volume and review variance on product price, but their findings are mixed. The perspective of mismatch cost framework (e.g. Sun 2012) argues that, at the market level, the impact of review variance on product price varies with review valence due to diverse product tastes across individuals. The perspective of classic expected utility framework (e.g. Wu and Ayala Gaytan 2013; Wu et al. 2013) further argues that heterogeneous risk attitudes across individuals directly drives the varying impact of both review volume and variance on willingness to pay, regardless of review valence. Although both frameworks have gained good empirical support, neither of them probed whether the impact of review volume or review variance varies within an individual. We extend the current research by focusing on the varying impact of review volume on consumers' willingness to pay. Combining economic and behavioral theories of decisions under uncertainty, we argue that consumers' preferences of uncertainty can vary both across and within individuals. The extended framework thus concludes that the impact of review volume on consumers' willingness to pay not only varies across individuals with different types of uncertainty preferences, but may also change with review valence within an individual of some types of uncertainty preferences. The framework is tested using an experimental study and an empirical study. Results from both studies provide good support for this broader framework.