Winning the Hardware Software Game Winning the Hardware-Software Game - 2nd Edition

Using Game Theory to Optimize the Pace of New Technology Adoption
  • How do you encourage speedier adoption of your product or service?
  • How do you increase the value your product or service creates for your customers?
  • How do you extract more of the value created by your product or service for yourself?



  • Playing the Yelp Ratings Game

    The Yelp Controversy

    Yelp is a social media site that hosts information about local businesses and lets customers post ratings and reviews about their experiences with those businesses. Yelp uses a proprietary algorithm to sort through posted reviews and filter out those that might be fake or inauthentic. Reviews that do not pass muster are relegated to a separate folder and not used to calculate businesses’ average ratings scores, which are prominently displayed to users.

    Yelp generates revenues to support its business primarily through sales of ads to local businesses that appear on Yelp’s website.

    Business owners have alleged that in an attempt to coerce (extort) businesses into advertising on Yelp’s site, or in retaliation for ceasing to advertise on its site, Yelp manipulates those businesses’ reviews by either

      i.  Filtering out good reviews and relegating them to the “reviews not recommended” folder, thus hiding them and lowering businesses’ average star ratings,

     ii.  Highlighting bad reviews of the businesses, and/or

    iii.  Creating fake bad reviews.

    Business owners allege that Yelp’s manipulations of the businesses’ reviews have resulted in lost sales for their businesses.

    Yelp vehemently denies accusations that it extorts business owners or manipulates the filtering of reviews.

    This analysis examines the Yelp Ratings Game. First, I describe the shift in customer relations that the advent of social media has engendered. Next, I describe how the Yelp site works. Then I discuss possible reactions by business owners to having ratings and reviews by users about their businesses posted online and perhaps manipulated to the business owners’ detriment. Finally, I discuss some other interesting issues related to the Game.