Association for Public Policy Analysis & Management

Collaborating with Yelp and the City of San Francisco, we revisit a canonical example of quality disclosure by evaluating - and helping to redesign - the posting of restaurant hygiene scores on Yelp.com. Implementing a difference-in-differences strategy, we find that posting restaurant hygiene scores on Yelp leads to a 12% decrease in purchase intentions for restaurants with low scores (as predefined by the City) relative to those with higher scores. We then create a “hygiene alert” – a message that appears only for restaurants identified by the City as having “poor” operating conditions with “high-risk” hygiene violations (using the same low score threshold as above) – and find a further 9% decrease in purchase intentions. Moreover, the presence of an alert reduces the restaurant's likelihood of getting a second alert. We conclude that disclosure policy should focus not only on what information to disclose, but also on how and where to design disclosure.