“The Distance between Stars:
How the
Steven Huff
June 26, 2007
Abstract
This paper investigates whether the range of quality
ratings can influence willingness to pay for the entire product category. In theory,
product ratings (i.e., stars, diamonds, etc.) exist on an ordinal scale, so
given that two rating systems have the same number of levels, there should be
no difference in how these ratings systems affect willingness to pay. However,
star ratings may appear as though they exist on an interval or ratio scale. If
individuals operate on this premise, then their willingness to pay will be
affected by the number of stars assigned to each product (i.e., WTP for
five-star items in a menu containing three-, four-, and five-star products will
differ from WTP for three-star items in the same menu when products are
assigned one- , two-, to three stars). Thus, willingness to pay will be
affected by the rating system used, despite that
product quality remains unchanged.
In this study, 1-3 stars were assigned to five products
in one treatment condition and 3-5 stars were assigned to the same products in
another treatment condition. The experimental results suggest that willingness
to pay for the higher-rated products increases even though the absolute
qualities of the five products remain unchanged across the two treatment
conditions.