Strategic manipulation of online information in duopolies: Inducing fight-back?

2021 
Abstract Online information is growingly influencing consumers’ purchase decision, and consequently firms may attempt to manipulate online information to amplify their sales. Different from prior work focusing on the impact of online information manipulation on a firm’s performance, few addressed the issue of its rival’s fight back to such information frauds. This paper investigates a duopoly market where one competitor considers how and whether to adopt fight-back strategy in response to its counterpart’s online information manipulation. Results show a firm’s manipulation strategy necessarily detriments to its rival’s payoff in two distinct ways (i.e., convert manipulation and overt manipulation), while the rival’s fight-back could impede the firm’s adopting manipulation, and its own profit improves accordingly, thus generating the effect of ‘two birds with one stone’. In addition, we also find that regardless of whether the rival adopts fight-back strategy or not, the firm still has the likelihood of online information manipulation intention, but the rival’s reactive behavior yields three possible outcomes (i.e., stoppable manipulation, unstoppable manipulation, and never-happened manipulation) under different conditions.
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