Michael Luca

Assistant Professor of Business Administration

Michael Luca is a faculty member at Harvard Business School. Professor Luca works closely with companies and cities to help them become more data-driven, and has ongoing collaborations with Yelp, Facebook, the UK government, and the City of Boston, in addition to other partners.   

Professor Luca teaches The Online Economy, an elective course about the strategic and operational decisions faced when designing and launching an online platform. He also teaches an elective course in which student teams develop behavioral interventions and experimental designs for government and company clients, called IFC: Behavioral Insights.  

Professor Luca's current work focuses on digital data and platforms, analyzing a variety of companies including Yelp, Amazon, and Airbnb. Professor Luca also works on issues related to the design of information disclosure. Focusing on the behavioral foundations of how people make decisions, he has done work on rankings, expert reviews, online consumer reviews, and quality disclosure laws, among other types of information provision.

His work has been written about in a variety of media outlets including The Wall Street Journal, New York Times, Washington Post, Boston Globe, Guardian, Telegraph, Huffington Post, Harvard Business Review, Atlantic, Quartz, Vox, and Forbes.

  1. Research overview

    by Michael Luca

    The growth of consumer review websites over the past decade has revolutionized the way in which consumers learn about product quality. The centrality of information to consumer welfare has also been underscored in public policy debates, where quality disclosure has become an increasingly popular policy instrument. How do these new sources of information affect consumer decisions and firm incentives? Professor Luca uses econometric methods to investigate this question, with a research agenda at the intersection of public policy and industrial organization.
  2. Crowdsourced reviews

    by Michael Luca

    To determine whether online consumer reviews influence the way that reputation is formed, Professor Luca has combined reviews from the website Yelp.com with public restaurant data. He has shown that a one-star increase in Yelp ratings results in a 5- to 9-percent increase in an independent restaurant’s revenue. Further, while chain restaurants are unaffected by rating changes, their market shares decline as Yelp penetrates the market.

    Professor Luca also examines which features of review websites have the largest impact on consumer decision making. He has found that while consumers do not use all available information, they respond more strongly when a rating contains more information (number of reviews overall and number of “elite” reviewers).

  3. The limits of reviews

    by Michael Luca

    Consumer reviews are an important source of information in the digital age. Yet there are limits to the role that reviews can play. In a case study, Professor Luca discusses the limits of reviews and how companies can create more comprehensive reputation systems geared toward facilitating trust in online marketplaces. In ongoing research, he is analyzing the role of information in online marketplaces such as Airbnb.

  4. Quality disclosure and consumer behavior

    by Michael Luca

    Professor Luca has investigated the relationship among quality disclosure, salience, and consumer behavior. He has found that when colleges are presented by rank in U.S. News & World Report, a one-rank improvement for an institution causes nearly a percentage point increase in the number of applications it receives. Conversely, rankings have no effect on application decisions when colleges are listed alphabetically, even though the quality data and methodology to calculate the rank are provided.