RESEARCH_FILE
Michael Luca
Harvard Business School
Known for:Economist who pioneered causal research on the revenue impact of online reviews, using Yelp rating discontinuities to isolate the effect of consumer-facing star ratings on restaurant revenue
SEE THE PRACTICE
Turn a thought this research explains into one clear move.
THE THOUGHT
“One bad review means I failed as a chef”
YOUR RECORDED RESPONSE
“That review describes one service, not my whole kitchen.”
ONE PRIVATE MOVE
Open the review, read it once, and copy only the concrete complaint into a note on your phone. Then close the review and write one sentence under it: ‘What this tells me is about this night only.’ Keep the note private.
Key findings
- 2016
Luca used a natural experiment in Yelp's rounding algorithm — which rounds displayed ratings to the nearest half-star — to create a regression discontinuity design. Restaurants just above a rounding threshold (gaining an extra visible half-star) showed 5–9% higher revenue than restaurants just below, demonstrating that the causal effect of online ratings on restaurant revenue is substantial and economically significant, particularly for independent restaurants without brand recognition. Reviews, Reputation, and Revenue: The Case of Yelp.com ↗