| Still-nascent as an Internet phenomenon, blogs have paved the way for the resurrection of the world's oldest form of marketing: word-of-mouth. Firms are realizing that including promotional messages in the blog content itself may be an effective way to market their products, in addition to banner ads on blogsites. Do firms have the option to buy out blogger support? Do bloggers have the incentive to mislead their audiences in response to sponsorship offers? Should blog readers continue to believe bloggers, even when they face uncertainty or deception? In essay 1, we model promotional blogging within a game-theoretic framework to answer these questions, and solve for Bayesian Nash equilibria. Surprisingly, we find that blog sponsorships are feasible and likely, particularly when a firm with existing goodwill will promote its lower quality product. We discuss managerial implications and provide insights for policy design to govern blog marketing.Wikipedia is defined by its founders as the "free encyclopedia that anyone can edit." This property, we argue, makes Wikipedia a public good and hence subject to underprovision. A puzzling feature of Wikipedia however is its enormous size, at roughly seven times that of its commercial counterparts. What is driving this growth? And how can we assess the reliability of this giant encyclopedia arising solely from free-editing? In essay 2, we model contribution to Wikipedia and its reliability. We demonstrate that Wikipedia is indeed subject to free-riding, and offer a novel explanation for the mitigation of under-provision under such circumstances. We also find that the public-good feature of Wikipedia and free-riding introduce a lower-bound in the quality of Wikipedia. We identify Wikipedia as part of a general Internet phenomenon that we call the Collaborative Net, and that includes features such as citizen journalism and online reviews. |
