  Daily deals sites such as Groupon offer deeply discounted goods and services
to tens of millions of customers through geographically targeted daily e-mail
marketing campaigns. In our prior work we observed that a negative side effect
for merchants using Groupons is that, on average, their Yelp ratings decline
significantly. However, this previous work was essentially observational,
rather than explanatory. In this work, we rigorously consider and evaluate
various hypotheses about underlying consumer and merchant behavior in order to
understand this phenomenon, which we dub the Groupon effect. We use statistical
analysis and mathematical modeling, leveraging a dataset we collected spanning
tens of thousands of daily deals and over 7 million Yelp reviews. In
particular, we investigate hypotheses such as whether Groupon subscribers are
more critical than their peers, or whether some fraction of Groupon merchants
provide significantly worse service to customers using Groupons. We suggest an
additional novel hypothesis: reviews from Groupon subscribers are lower on
average because such reviews correspond to real, unbiased customers, while the
body of reviews on Yelp contain some fraction of reviews from biased or even
potentially fake sources. Although we focus on a specific question, our work
provides broad insights into both consumer and merchant behavior within the
daily deals marketplace.
