The Bright Side of Lower Quality: Evidence from Restaurant Exploration.

This article investigates how quality reference effects influence consumer behavior in the two-stage consumption process of hedonic goods, specifically focusing on restaurant choices and dining satisfaction. Using a novel longitudinal dataset of online restaurant reviews from Barcelona and Paris, the study develops and empirically tests a framework grounded in prospect theory that distinguishes between the ex ante choice stage and the ex post outcome stage. Findings reveal that consumers exhibit loss aversion when selecting restaurants, disproportionately avoiding options below their quality reference formed mainly from public information, but experience less sensitivity to quality losses in satisfaction due to downward expectation adjustments based on their own past experiences. This “bright side of lower quality” suggests that satisfaction penalties for lower-quality choices are mitigated, implying that alternating between high- and low-quality experiences may enhance overall utility, challenging conventional recommendation systems that assume static expectations. The study controls for alternative explanations such as satiation and user constraints, and its methodology and insights have potential applications beyond restaurants to other hedonic consumption contexts.