By contrast, The Seattle Times had reviewed roughly 5 percent. In Seattle alone, Yelp, which launched in 2005, had accumulated 60,000 reviews by 2009, rating 70 percent of the city's restaurants. In theory, ratings sites fill in the gaps by providing a tremendous amount of information on which to base decisions. "Restaurants are a classic example in economics where the consumer has to make a decision based on very little information," he says. To get a handle on the phenomenon, Luca focused on one of the most common uses of online ratings: restaurants. Luca is looking at rankings, expert evaluations, online consumer reviews, and quality disclosure laws to see how they work in market settings, and which are most important for consumers. How reputation is earned in the digital age is a fertile area of his research. "I have always been interested in how companies form their reputations, not only restaurants and hotels but also schools and doctors," says Luca. In the paper Reviews, Reputation, and Revenue: The Case of, Harvard Business School Assistant Professor Michael Luca set to find out exactly by how much, and identify winners and losers in the process. Most would agree these sites do influence consumers' decisions. “Restaurants are a classic example in economics where the consumer has to make a decision based on very little information” Along the way, they've earned a loyal following from fans, but also the ire of businesses that find themselves hurt by dyspeptic reviews. In recent years, consumer review sites including Yelp, Citysearch, and TripAdvisor have become the first stop for recommendations on everything from dinner to dentists.
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