My Reviews are taken away, what about my Reputation? The Asymmetric Impact of Resetting the Review History on Mobile App Platforms

Online reviews turn less informative when a product’s attributes change over time, as is the case for digital goods such as apps. This limits the relevance of existing reviews for reputation building. As part of their platform governance, digital platforms have grappled with this relevancy problem, and in response, have explored various mechanisms to overcome it. One such distinctive mechanism in the context of apps is resetting online review history with the release of each app update. This resetting mechanism ensures that an app’s crowd-sourced reputation is based only on online reviews and their aggregated metrics, which are reflective of the latest app release. The worry is, however, that such resetting may result in a complete loss of app reputation upon updating. In this paper, we study the implications on app performance from this governance mechanism that resets an app’s online review history with each update. We are fortunate that a main player in the app platform market implemented such a mechanism, allowing us to empirically study economic consequences of tying this resetting mechanism with app updating. We exploit an instrumental variable approach that enables us to establish causality in our analysis. We identify asymmetrical impact across apps when their crowd-sourced reputation is reset. Our results show that for the small group of paid apps, updating has only a marginal impact on performance, if any. For the sizeable group of free apps, the results are more nuanced. Top-ranked “superstar apps” benefit from updating. All remaining free apps, however, take a big hit, which we attribute to their reputation being reset. We find that within this latter group some apps lose more than others contingent on their prior reputation. Our results help inform developers about their software updating strategies and app platforms about their governance choices to avoid adverse implications.