Munich Personal RePEc Archive

The Effect of Information Salience on Product Quality: Louisville Restaurant Hygiene and Yelp.com

Makofske, Matthew (2017): The Effect of Information Salience on Product Quality: Louisville Restaurant Hygiene and Yelp.com.

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In late June 2013, the city of Louisville, Kentucky, announced plans to provide restaurant health inspection data to Yelp.com for publication on their popular online consumer-review forum. These data were already publicly available on the city's website. I utilize this partnership to test whether an increase in the salience of disclosed quality information on a particular product attribute, induces sellers to improve product quality along that dimension. Consumers use Yelp to gather information on many characteristics of a restaurant's product. Consumers depend less on Yelp to learn about chain-affiliated restaurants, because much of this information is conveyed through the chain's reputation. Using data from over 11,000 Louisville restaurant health inspections, I compare health inspection performance for independent and chain-affiliated restaurants, before and after the announcement of the partnership. Controlling for a variety of factors, I estimate that this increased salience caused substantial improvement in independent restaurant hygiene. The average treatment effect is estimated to be a 12-14% decrease in health score point deductions, and a 29-37% decrease in critical violations (those deemed to be the greatest public health risk), per inspection. The effect of the Louisville-Yelp partnership on health score point deductions is entirely evident in restaurants' first inspections following its announcement, where the estimated effect is a 14-16% relative decrease.

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