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  • 2022
  • Working Paper

Consumer Reviews and Regulation: Evidence from NYC Restaurants

By: Chiara Farronato and Georgios Zervas
  • Format:Print
  • | Language:English
  • | Pages:45
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Abstract

We investigate the informativeness of hygiene signals in online reviews, and their effect on consumer choice and restaurant hygiene. We first extract signals of hygiene from Yelp. Among all dimensions that regulators monitor through mandated restaurant inspections, we find that reviews are more informative about hygiene dimensions that consumers directly experience—food temperature and pests—than other dimensions. Next, we find causal evidence that consumer demand is sensitive to these hygiene signals. We also find suggestive evidence that restaurants that are more exposed to Yelp are cleaner along dimensions for which online reviews are more informative.

Keywords

Restaurants; Reviews; Hygiene; Yelp; Regulation; Food; Governing Rules, Regulations, and Reforms; Consumer Behavior

Citation

Farronato, Chiara, and Georgios Zervas. "Consumer Reviews and Regulation: Evidence from NYC Restaurants." NBER Working Paper Series, No. 29715, February 2022.
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About The Author

Chiara Farronato

Technology and Operations Management
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  • Is AI the Right Tool to Solve That Problem? By: Paolo Cervini, Chiara Farronato, Pushmeet Kohli and Marshall W Van Alstyne
  • Webmunk: A New Tool for Studying Online Behavior and Digital Platforms By: Chiara Farronato, Andrey Fradkin and Chris Karr
  • Consumer Protection in an Online World: An Analysis of Occupational Licensing By: Chiara Farronato, Andrey Fradkin, Bradley Larsen and Erik Brynjolfsson
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