Over a month ago, a blog post written about customer reviews on carpets made it to the front page on Digg.com with 569 diggs. The blogger noticed on HomeDepot.com that three comments posted within the span of three months seemed to be very similar. He noted:

“I suppose it could be the same person who made all three comments. It’s not uncommon for people to move three times in the span of three months right? So she was in Saskatchewan, then hopped over to Toronto, decided that wasn’t for her and moved to Sudbury…And of course she only identified herself as “Sally” while living in Toronto.”

So why am I picking on this random blog post about some guy’s random observation? What struck me was that a blog post that had almost no conclusive evidence about the posting of fake reviews to increase the sale of rugs at HomeDepot.com, and the post made it to the front page of digg—which is no easy feat. I think the popularity of this ordinary rambling exemplifies our increasing skepticism of consumer of reviews on the internet and our emotional reaction to feeling cheated. I think that this increasing cynicism will change the signals in information cascades that affect consumer buying behavior.

With the internet, consumers now have access to large source of information to learn about products before they buy them. Some of the most useful and persuasive information include consumer reviews because of lack of connections between companies and more personal nature of writing. However, as companies learn of the power of consumer reviews as a tool to drive sales, they will be more tempted to seed fake reviews—especially in the beginning of a product lifecycle to induce an information cascade. The post brings up the question of whether we can trust consumer reviews and whether our skepticism of reviews will prevent an information cascade from happening. While we would normally find a good consumer review to be a buy signal in the cascade model, what happens if we believe it’s a fake and decide to disclose our speculation to the rest of the world as this blogger did? The emotional effect of feeling cheated might make us want to never buy from the retailer again. This new level skepticism will put companies in a very dangerous situation. Overall, I believe it can have a positive impact for consumers because companies will be discouraged to writing fake reviews. But since companies now know the way consumers analyze reviews, what prevents them from censoring reviews that are not palatable to us?