Credit: Aleksei Smirnov (HSE University)
Aleksei Smirnov, Assistant Professor, HSE University Faculty of Economic Sciences, and Egor Starkov, Assistant Professor, University of Copenhagen, have constructed a mathematical model that explains why it is advantageous for sellers not to delete negative reviews of their products. A study detailing this conclusion has been accepted for publication in
Empirical studies have indicated that consumers are more likely to buy a product with a rating slightly below a perfect one rather than a perfect one. Using game theory, the researchers analysed how negative reviews affect sales.
The researchers model, which they presented in their paper Bad News Turned Good: Reversal under Censorship , involves two sets of participants: sellers, who know the true quality of the products they are selling and can selectively publish reviews about it, and buyers, who do not know a product s quality and can be categorized as either naïve or rational . Ra
Credit: Sergey Stepanov (HSE University)
In assessing an employee s performance, employers often listen to his immediate supervisor or colleagues, and these opinions can be highly subjective. Sergey Stepanov, an economist from HSE University, has shown that biased evaluations can actually benefit employers. An article substantiating this finding was published in the
The model described in the article Biased Performance Evaluation in A Model of Career Concerns: Incentives versus Ex-Post Optimality was developed within the career concerns framework pioneered by Bengt Holmström. His paper represents the relationship between an employee (often called an agent by economists) and an employer, or principal (broadly speaking, this can be the market as a whole). This modelling considers three components of performance: talent, effort and random factors. An agent s incentive to exert effort arises from the fact that better performance results in a higher evaluation of the agent s talen