Online reviews sway buyer choices and bargaining tactics

As tariffs loom, online reviews might be your best bargaining chip when buying a car.

With car prices potentially rising due to looming tariffs, many buyers wonder if now’s the time to act. But while the clock ticks on pricing, new research suggests another key factor could save you money: online reviews.

Ask just about anyone if they ever read online reviews before making a purchase, and you’re likely to hear "yes." When more than 1,000 U.S. consumers were surveyed in early 2025, only 4% said they never looked at reviews. The rest of us do, and multiple studies have proven that reviews impact purchasing behavior.

Reviews can also impact a consumer’s bargaining power, according to Jisu Cao, assistant professor of information systems. Her research shows that reviews influence both consumer choices and the negotiated price a consumer eventually pays.

Let’s make a deal

Consumers love a good bargain, and one survey found that 48% of buyers were willing to negotiate on everyday items. Among survey respondents who did haggle for discounts, 89% managed to get a price break at least once.

Car buying is one area where most people expect to negotiate, and people also usually look at reviews when looking for a new ride. In one Capgemini survey of the Chinese car marketplace, 80% of respondents said their purchase decision had been affected by social media, especially in review forums. More than two-thirds of buyers — 66% — visited auto review platforms to inform their decisions.

Cao had noticed she also looked at reviews when she shopped for cars. In doing so, she realized reviews pack plenty of negotiation information. To evaluate how much reviews could help buyers nudge sellers into offering a lower price, Cao teamed up with Sha Yang from the University of Southern California and analyzed more than 46,000 observations from real-world reviews on a Chinese car-shopping website.

Previous researchers who had examined the power of online reviews only looked at how customer opinions influence product preferences among buyers. The observations Cao and Yang worked with included details on what the consumer purchased and how much it cost. This enabled the scholars to explore the link between reviews and negotiated prices, too.

Every man has his price

Within the reviews Cao studied, nearly 7% of reviewers use the word "discount" in their comments. Some mention negotiating and tactics used to get a lower price, too.

The data also showed that more than 99% of the prices paid were lower than the dealer’s list price, and the dealer’s list prices were consistently lower than the manufacturer’s suggested retail price. This, the researchers concluded, justified the anecdotal assumption that people do haggle over auto prices.

What review characteristics hurt a buyer’s ability to get a great deal? Average rating and historical price.

"If previous customers paid a high price, consumers reading the review may believe they don’t have a lot of bargaining power," Cao said. Likewise, if the average rating is high, it can decrease consumer bargaining power because these ratings mean the car is popular, and dealers have less incentive to drop the price to make a sale.

High average review ratings boost seller profits. When Cao and Yang analyzed the numbers, they found that an average rating of 4.60 on a five-star scale can increase dealer profit by 93.75% compared with an average product rating of 3.72.

However, low prices can strengthen the buyer’s negotiating position. "If other people pay a low price, you learn that you don’t need to pay a lot for this product," she explains. "That will affect your final choice and the final price paid by you."

Cao verified her statistical findings with lab experiments using approximately 200 participants for each study. In one half of the research, participants saw reviews with a high average score, and the other half saw reviews with a low average score. As expected, participants who saw the high average score believed buyers had little bargaining power, and more than two-thirds of them were likely to accept a hypothetical offer from a dealer in the simulation study. Participants who saw low scores felt buyers were more empowered, and less than half of them were inclined to say "yes" to the sale price presented in the exercise.

In another experiment, participants who saw reviews with high historical prices had a higher chance of accepting a dealer’s offer than those who saw low historical prices. Again, the high prices left people feeling they had low chances of succeeding in a negotiation.

Too much of a good thing

As noted earlier, many people mention their discounts and negotiations in their car reviews. The frequency of such mentions also affects a buyer's negotiating power.

"If previous discounts were high and later consumers read about these discounts, those consumers will want the same discount amount," Cao says. Sure enough, when she took this finding to the lab for a simulation study, experiment participants who saw a low discount frequency in the reviews they read were more likely to accept a dealer’s offer than those who saw discounts mentioned frequently in the reviews used for the experiment.

This finding has important implications for car dealers and perhaps others in sales management, Cao notes. "Many dealers offer discounts in exchange for better reviews, but they could be sacrificing future profits," she explains. "Consumers will leverage information about the discounts and negotiate better prices."

Another counterintuitive learning from Cao’s research is this: While high consumer ratings may attract more consumers, they may not result in more sales, particularly where negotiation is typical, such as in the automobile market.

As Cao explains, "The average rating on a product is a double-edged sword. On one hand, it’s going to affect whether people like the product. On the other hand, it will affect a consumer’s negotiation power and increase the price."

"High ratings are not necessarily going to make people more likely to buy," she adds. After all, who doesn’t like to drive a bargain home from the local car dealer?