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Psychol Sci. 2018 Sep;29(9):1475-1490. doi: 10.1177/0956797618775080. Epub 2018 Jul 25.

How Endogenous Crowd Formation Undermines the Wisdom of the Crowd in Online Ratings.

Author information

1
1 Department of Economics and Business, Universitat Pompeu Fabra.
2
2 Barcelona School of Management, Universitat Pompeu Fabra.
3
3 Department of Marketing & Management, University of Southern Denmark.
4
4 Yale School of Management, Yale University.
5
5 The Federmann Center for the Study of Rationality, The Hebrew University of Jerusalem.

Abstract

People frequently consult average ratings on online recommendation platforms before making consumption decisions. Research on the wisdom-of-the-crowd phenomenon suggests that average ratings provide unbiased quality estimates. Yet we argue that the process by which average ratings are updated creates a systematic bias. In analyses of more than 80 million online ratings, we found that items with high average ratings tend to attract more additional ratings than items with low average ratings. We call this asymmetry in how average ratings are updated endogenous crowd formation. Using computer simulations, we showed that it implies the emergence of a negative bias in average ratings. This bias affects items with few ratings particularly strongly, which leads to ranking mistakes. The average-rating rankings of items with few ratings are worse than their quality rankings. We found evidence for the predicted pattern of biases in an experiment and in analyses of large online-rating data sets.

KEYWORDS:

collective judgment; judgment bias; open data; sampling bias; wisdom of the crowd

PMID:
30044721
DOI:
10.1177/0956797618775080

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