A game-theoretic approach to customer rating of hotels on OTA platforms

Abstract

This study develops a game-theoretic model of moral hazard in hotel–guest interactions on Online Travel Agency (OTA) platforms, addressing a question the reputation literature has largely overlooked: can customer reviews discipline hotel behavior even in genuinely one-shot transactions, where a guest and hotel never interact again? Standard repeated-game accounts of reputation rely on a shadow of the future that is absent in tourist-dependent markets dominated by one-time visitors. Drawing on principal–agent theory and community-enforcement models of reputation, we model the hotel–guest interaction as a static moral hazard game in which a neutral OTA verifies and enforces review-based penalties. Hotels choose between honoring service commitments and opportunistically degrading quality; customers, upon experiencing the service, decide whether to post an unfavorable review. We derive a mixed-strategy equilibrium and show that a credible, sufficiently severe, and sufficiently probable review penalty is enough to sustain partial honesty without any repeated interaction. Numerical simulation and sensitivity analysis identify precise thresholds on cheating gains, penalty magnitude, and enforcement probability at which the disciplining mechanism breaks down. Because the model assumes a neutral, best-case OTA, it provides an upper bound on what review systems can achieve, offering testable implications for OTA platform design, hotel management, and regulatory oversight of online reputation systems.

Keywords

game theory, moral hazard, reputation, eWOM, OTA platforms, hospitality management

ORCID Identifiers

George Lymperis: https://orcid.org/0009-0002-1918-6565

Lambros Drossos: https://orcid.org/0000-0001-6198-9711

DOI

10.5038/2640-6489.11.2.1372

Recommended Citation

Lymperis, G., & Drossos, L. B. (2026). A game-theoretic approach to customer rating of hotels on OTA platforms. Journal of Global Business Insights, 11(2), 113-125. https://www.doi.org/10.5038/2640-6489.11.2.1372