This paper presents a theoretical analysis of how firms' manipulation of online opinion forums affects firm profits and consumer surplus. It identifies three main findings: first, if manipulation strategies align with a firm's true quality, it can increase the information value of forums for consumers, potentially benefiting them. Second, equilibria where manipulation strategies correlate with a firm's true quality exist under specific conditions related to the firm's net payoff function. Third, in settings where honest consumer opinions are highly precise, eliminating manipulation benefits firms and society. However, firms engage in costly manipulation to avoid negative consumer biases. The paper suggests that filtering technologies to reduce manipulation costs can benefit firms more than consumers, particularly as user-generated content grows.
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Dellarocas, Chrysanthos. "Strategic manipulation of internet opinion forums: Implications for consumers and firms." Management science 52.10 (2006): 1577-1593.
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