Sep. 4, 2012 at 4:01 PM ET
Positive restaurant reviews on Yelp.com can make a major difference for eateries, a new study says: Higher-rated restaurants are fully booked half the time, while those with lower ratings are booked only about a third of the time.
The study, from UC Berkeley professors Jeremy Magruder and Michael Anderson, looked at competing local restaurants that have a ratings difference of a half star on the online review site.
The results had nothing to do with either price or service, the professors said; only positive Yelp reviews were taken into account for the study, which looked at Yelp's 1- to 5-star rankings for 300 San Francisco area restaurants.
The findings "indicate that Yelp ratings have substantial effects on restaurant customer flows," and the professors' estimates "imply that restaurants face strong incentives to manipulate their Yelp ratings by leaving fake positive reviews."
This has long been an issue for just about any online review site where users submit reviews, but Yelp is the king of them, with more than 60 million users worldwide.
Yelp is used to dealing with the issue of fake reviews; the site explains in this blog posting about how its review "filter" works.
The UC Berkeley study is published in the current issue of The Royal Economic Society's The Economic Journal. (The article has the unappetizing title of "Learning from the Crowd: Regression Discontinuity Estimates of the Effects of an Online Review Database.")