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Abstract

Online platforms often provide rating information to customers to relieve the uncertainty they encounter when purchasing experience goods. Prior research has focused mostly on the roles of rating volume and the valence of an average rating among the various possibilities. However, less frequently investigated is the effect of rating dispersion, which may be associated with uncertainty regarding how well a product fits a customer’s personal preference, on new trials of experience goods. In this study, we examine the effect of rating dispersion on new trials of experience goods and identify the conditions which intensify or reduce the effect. Empirical analyses of movie box office sales data and online rating data reveal three interesting findings. First, movie sales decrease as movie ratings become increasingly dispersed. Second, the negative effect of rating dispersion on movie sales is more pronounced with more rating volume. Third, this negative effect weakens when additional information about a movie is available (i.e., higher average rating, greater star power, and time since its release). We discuss the academic and practical implications of our findings.

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