Human judges could not distinguish between the real ones and the fakes. But the algorithm correctly identified the reviews as real or phony with 90 percent accuracy by picking up on subtle differences, like whether the review described specific aspects of the hotel room layout (the real ones do) or mentioned matters that were unrelated to the hotel itself, like whether the reviewer was there on vacation or business (a marker of fakes). Great, but in the cat-and-mouse game of fraud vs. fraud detection, phony reviewers can now design feedback that won't set off any alarm bells.
Just how prevalent are fake reviews? A trio of business school professors, Yale's Judith Chevalier, Yaniv Dover of Dartmouth and USC's Dina Mayzlin, have taken a clever approach to inferring an answer by comparing the reviews on two travel sites, TripAdvisor and Expedia. In order to post an Expedia review, a traveler needs to have made her hotel booking through the site. Hence, a hotel looking to inflate its rating or malign a competitor would have to incur the cost of paying itself through the site, accumulating transaction fees and tax liabilities in the process. On TripAdvisor, all you need to post fake reviews are a few phony login names and email addresses.
Differences in the overall ratings on TripAdvisor versus Expedia could simply be the result of a more sympathetic community of reviewers. (In practice, TripAdvisor's ratings are actually lower on average.) So Mayzlin and her co-authors focus on the places where the gaps between TripAdvisor and Expedia reviews are widest. In their analysis, they looked at hotels that probably appear identical to the average traveler but have different underlying ownership or management.
There are, for example, companies that own scores of franchises from hotel chains like Marriott and Hilton. Other hotels operate under these same nameplates but are independently owned. Similarly, many hotels are run on behalf of their owners by large management companies, while others are owner-managed. The average traveler is unlikely to know the difference between a Fairfield Inn owned by, say, the Pillar Hotel Group and one owned and operated by Ray Fisman.