Conflict of Interest in Third-Party Reviews: An Experimental Study

• 成果类型: Article
• 署名作者: Ham, Sung H.; Koch, Ingrid; Lim, Noah; Wu, Jiabin
• 署名单位: Michigan State University; National University of Singapore; National University of Singapore; University of Oregon
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2020.3863
• 发表日期: 2021
• 页码: 7535-7559
• 关键词: conflict of interest; third-party reviews; RECIPROCITY; implicit contracts; behavioral economics; Experimental economics

摘要

This paper experimentally examines a conflict of interest (COI) situation in which a third-party reviewer provides a product assessment for a firm but also potentially benefits economically from the assessed firm's rival. We present a behavioral economics model to examine how reviewer competition and reciprocal relationships between firms and reviewers affect decision outcomes, followed by an experiment to investigate the model predictions. The experimental results are consistent with the behavioral model predictions. In particular, we empirically document a COI problem where the third-party reviewer's report is biased, and consequently, the assessed firm underinvests in product quality. We find that this adverse result is driven by reciprocity between the third-party reviewer and the assessed firm's rival. When we introduce an additional reviewer such that there is competition among the third-party reviewers, reporting biases are alleviated, and firms raise product quality levels. Interestingly, however, when informal agreements exist between the third-party reviewer and the assessed firm's rival, reviewer competition exacerbates biases even more compared with the case without competition, further undermining the assessed firm's incentive to invest in product quality.