Service Quality, Ratings and Digital Platforms : An Analysis of a Medicine Delivery Platform Using a Quasi-Experiment

Digital platforms and firms in the sharing economy routinely invest in service- quality improvements and still grapple with service quality inconsistency. The impact of service inconsistency on platform members’ rating behavior remains un-examined. I use unique data from an online medicine delivery platform in India that relies on delivery persons for their service delivery. Exploiting idiosyncratic variation in delivery person allocation, I find that when a customer encounters a well-performing delivery person, she will give a poor rating to the delivery person in the next encounter and vice-versa. This cyclical nature can be explained by the customer’s prior expectations about the next delivery person based on her previous encounter with a delivery person. I further show that this effect is moderated by the nature of the ailment and the monetary value of the transaction