Over time, firms across industries have adopted quality verification as a costly yet credible tool to signal product excellence and convey reliable information to consumers. With the prosperity of E-commerce, consumers increasingly rely on online reviews—an accessible but inherently biased source of product information—to guide their purchase decisions. In practice, companies now frequently combine quality verification with consumer reviews to influence the perception of product quality. This study examines how firms can strategically determine their optimal quality verification approach to mitigate the negative effects of review bias, and how the timing of verification affects outcomes. We consider two quality verification formats: pre-release verification, conducted before reviews are available, and responsive verification, conducted after reviews are observed. Pre-release verification helps shape early consumers’ expectations and improves late consumers’ interpretation of biased reviews. As the magnitude of review bias increases, firms are more likely to proactively adopt pre-release verification, although this leads to a decline in expected profits due to higher upfront costs. By contrast, responsive verification allows firms to selectively react to negatively biased reviews, preserving the upside potential of favorable reviews. When review volatility is high, this reactive strategy can lead to higher profits. Our results show that each verification format can enhance firm profitability under specific conditions, depending on the cost of verification and the degree of review bias. These findings offer actionable insights into how firms can manage information flows and strategically balance third-party verification with user-generated content in dynamic market environments.
Guan et al. (Wed,) studied this question.