B yelp button

I apologize for the nonsense words in that headline; such are the times in which we live. In a recent study, researchers from Boston University and Harvard examined 16,000 Groupon deals in 20 cities over the first seven months of this year.

From MIT's Technology Review:

But their most controversial finding is that a Groupon deal seems to have an adverse impact on reputation as measured by Yelp ratings. Their analysis shows that while the number of reviews increases significantly due to daily deals, average rating scores from reviewers who mention daily deals are about 10% lower than scores of their peers.

They examine this effect in more detail by pinpointing reviews that specifically mention the words "Groupon" and "coupon". "Reviews mentioning either keyword are associated with star ratings that are 10% lower on average than reviews that do not, while the very small fraction of reviews mentioning both keywords are more than 20% lower on average," they say.

I guess the dime store psychological analysis here is that the perception of value went down on those businesses. If I have two glasses of wine in front of me and you tell me one's much more expensive, I'll be more likely to think it tastes better.

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