The Impact of AI-generated Review Summaries: Evidence From Indian E-Commerce
The rise of AI-generated overviews is transforming how consumers interact with information in digital markets. These overviews, powered by the development of large language models (LLMs), condense vast volumes of information into accessible narratives, potentially mitigating the effects of information overload and providing better insights into product characteristics. In this research, I focus on AI overviews of product reviews on e-commerce platforms and investigate whether they influence consumer purchasing decisions by affecting product-level sales and pricing. Leveraging variation in the adoption of these overviews across the two largest e-commerce platforms in India- Amazon and Flipkart- I apply a difference-in-differences framework, with three-way fixed effects, to isolate the effect of AI summaries. I aim to provide new, and among one of the first, to my knowledge, evidence on the role of algorithmic information processing and presentation of consumer reviews in shaping consumer behavior, market outcomes, and platform competition in digital markets.