Recovering the Actual Impact of Word-of-Mouth and Biases in Suppliers’ Expectations Based on Extreme Behaviors and Information Symmetry

51 Pages Posted: 14 Dec 2011

See all articles by Duk Bin Jun

Duk Bin Jun

College of Business, Korea Advanced Institute of Science and Technology (KAIST)

Dong Soo Kim

Ohio State University (OSU) - Fisher College of Business

Date Written: November 1, 2011

Abstract

In this study, we suggest a framework to investigate and recover the actual impact of extreme online ratings and to understand biases in suppliers’ expectations about box office sales, based on the nature of extreme behaviors, willingness to rate and skepticism, and information symmetry in the motion picture industry. The suggested framework deals with the following three issues: first, the moderating effect of the decay pattern of the WOM effect, second, the adjustment for the actual impact of extreme ratings, and finally, differences between suppliers’ and moviegoers’ responses. We apply the suggested framework to the Korean movie data from 2006 to 2009 for an empirical example. The empirical result strongly supports our expectations, which is based on previous behavioral research.

Keywords: word-of-mouth, extreme behaviors, online ratings, willingness to rate, skepticism, information

Suggested Citation

Jun, Duk Bin and Kim, Dong Soo, Recovering the Actual Impact of Word-of-Mouth and Biases in Suppliers’ Expectations Based on Extreme Behaviors and Information Symmetry (November 1, 2011). KAIST College of Business Working Paper Series No. 2011-004, Available at SSRN: https://ssrn.com/abstract=1972066 or http://dx.doi.org/10.2139/ssrn.1972066

Duk Bin Jun (Contact Author)

College of Business, Korea Advanced Institute of Science and Technology (KAIST) ( email )

85 Hoegiro, Dongdaemoon-gu
Seoul 02455
Korea, Republic of (South Korea)

Dong Soo Kim

Ohio State University (OSU) - Fisher College of Business ( email )

558 Fisher Hall
2100 Neil Avenue
Columbus, OH 43210-1144
United States
614-313-4868 (Phone)

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