Abstract
This paper investigates disclosure by testing if the game theoretic predictions of unravelling theory are borne out in a heretofore unstudied market. We analyse TripAdvisor disclosures from hoteliers across 22 locations (N = 4357). Contrary to theoretical predictions, we find that disclosure decreases linearly with TripAdvisor ratings. We find the same pattern of disclosure occurs when consumers know the information provider has information to disclose, and when they do not. We also find evidence suggesting the most elite hotels may disclose less. We provide practical as well as theoretical implications.
Highlights
This paper contributes to the strategic disclosure literature by investigating a fast-paced consumer market
We investigate TripAdvisor disclosures regionally and internationally
We report monotonic disclosure relationships, with hotels more likely to disclose higher TripAdvisor ratings
Summary
According to the game theoretic account, if service providers do not display certain information, rational consumers should deduce that their services are of extremely poor quality. Unravelling assumes consumers lack complete information and so the rating is informative We are confident this is true for hotel stays, which typically involve travel to a location/accommodation about which guests have limited knowledge. Given this problem, trust-based websites such as TripAdvisor have emerged and influence consumer choice by offering interpretable scales. A key assumption of unravelling theory, is that consumers know that providers have information to disclose.
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