Marketing Seminar（2017-07）

Title:Bilateral Ratings and P2P Market Competition and Segmentation

Speaker:T. Tony Ke, MIT Sloan School of Management

Time:Wednesday, April 26, 13:30-15:00

Place:Room 217, Guanghua Building 2

Abstract

This paper examines how bilateral ratings influence market segmentation of heterogeneous consumers on a matching platform. Under a competitive search and matching framework, we show that in equilibrium, consumers with low cost-to-serve (i.e., good ratings) apply to both high-quality and low-quality service providers, and expect a higher utility; while consumers with high cost-to-serve (i.e., bad ratings) apply to only low-quality service providers, and expect a lower utility. We compare the equilibria under bilateral and unilateral ratings, and find that bilateral ratings may soften competition, lead to higher prices, and thus harm consumers’ welfare.

Introduction

T. Tony Ke is an Assistant Professor of Marketing at the MIT Sloan School of Management. His research is in the area of marketing analytics, social networks, and marketing strategy. His current work focuses on modeling consumer search for information, especially on multiple attributes of products, and analyzing firms’ pricing and product strategies. He has work or consulting experience with Microsoft, Xerox, Walmart, Facebook, and Charles Schwab. He holds a PhD in Operations Research, an MA in Statistics, and an MA in Economics from University of California, Berkeley, and a BS in Physics and a BS in Statistics from Peking University.

//mitsloan.mit.edu/faculty-and-research/faculty-directory/detail/?id=113769

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