Fake reviews and naive consumers

Abstract Online reviews affect consumer choices and are therefore frequently faked. Not all consumers are aware of this. In a model with fake reviews and naive consumers, the unique equilibrium is characterized by partial pooling, where fake reviews are persuasive and blend in with real ones. Raising consumer awareness has opposing effects on the naive and aware consumer groups. If real reviews are written strategically, they are not always truthful. Under favorable market conditions, the equilibrium with all strategic reviewers is outcome equivalent to one with all aware consumers. Thus, awareness campaigns can yield similar outcomes, regardless of their target audience (JEL C72, D82, D83, L15)