#2293. Underpromise and overdeliver? - Online product reviews and firm pricing

September 2026publication date
Proposal available till 30-05-2025
4 total number of authors per manuscript3510 $

The title of the journal is available only for the authors who have already paid for
Journal’s subject area:
Economics, Econometrics and Finance (miscellaneous);
Strategy and Management;
Places in the authors’ list:
place 1place 2place 3place 4
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Contract №2293.1 Contract №2293.2 Contract №2293.3 Contract №2293.4
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2 place - free (for sale)
3 place - free (for sale)
4 place - free (for sale)

Abstract:
We consider a signaling model capturing the introductory and the mature phase of a product. Information concerning product quality is transmitted between consumers through reviews, which partially depend on the expectations consumers had prior to their purchase. When future sales are sufficiently important, a novel tension arises: High-quality types may want to underpromise and overdeliver by imitating low types in order to get a better review. We show the existence of a Pareto-improving separating equilibrium. Both more informative reviews and price transparency can lead to higher prices. Our analysis reveals a new rationale for loss-leadership.
Keywords:
Consumer reviews; Loss leadership; Quality signaling; Reputation

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