Several interesting results emerge from our econometric analyses. First, we estimate that after
adopting a multi-dimensional rating system, on average, the overall ratings on TripAdvisor has
increased by 0.154. Notably, the increase in ratings is even stronger as more dimensional ratings
are accumulated. This is consistent with the view that the multi-dimensional rating system enables
and enhances information transfer among consumers more efficiently, leading to more effective
purchase decisions and more satisfied customers. Second, consistent with the finding that the
multi-dimensional system enhances information transfer efficiency, we show that ratings on multi-
dimension rating systems are convergent, suggesting that consumers’ consumption reflect their
expectation. Third, we find that consumers weigh in different attributes when rating in a multi-
dimensional system; while in a single-dimensional system, consumers’ ratings reflect the
experience in the least satisfied dimension as identified in the multi-dimensional rating system.
This finding provides a plausible explanation why information transfer efficiency is lower in a
single-dimensional system. Moreover, we show that not all restaurants benefit the same from
rating system change, in which, restaurants with lower price level would benefit more. This is
again consistent with the view that multi-dimensional ratings help convey quality information
more efficiently and reduce both quality uncertainty and fit uncertainty, and therefore consumers
don’t have to rely on price level to infer restaurant quality. Overall, our study makes a pioneering
effort in establishing a causal effect of adopting a multi-dimensional rating system using a real-
world quasi-natural experiment.
This paper proceeds as follows: Section 2 presents a survey of related literature. Section 3 describes
the theoretical foundations and the proposed hypotheses. Section 4 presents the data, empirical
methodologies and results of econometric analyses. In Section 5, we discuss the results, managerial
and theoretical implications and future research with a conclusion of section 8.