Guillaume Hollard and Ghewa El Dora
We leverage large-scale evidence on food and cosmetic ratings generated by millions of users of a rating app, with billions of scans. Our study highlights the role of digital rating platforms in shaping market dynamics, particularly in industries where consumers rely heavily on third-party assessments. We show that products with a strong “credence” dimension—where quality and safety remain difficult to evaluate even after consumption—are significantly more likely to be reformulated by firms. In sharp contrast, products whose quality can be inferred through repeated consumption tend to be less affected, if at all, by the diffusion of information. We then explore potential confounding factors and offer new insights into the ongoing debate on food and cosmetics labeling.