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I am writing a peer review exercise and I am not sure when referring to specific parts of the paper whether it is better to quote or paraphrase them. What is the correct protocol on such this?

The review decides whether the paper gets published in a small magazine, whether that makes any difference to these things, I am not sure.

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No, the review doesn't decide. The review recommends. The editor decides. – JeffE Jan 13 '13 at 23:22
up vote 5 down vote accepted

It depends why you are quoting/paraphrasing.

Usually I structure my review in two parts. The first part summarizes the paper, the major contributions, and the high-level strengths and weaknesses of the submission. In this part I paraphrase. This shows the authors, and the editor, that I have read and understood the paper well enough to describe its ideas in my own words.

In the second part I get into the details, i.e. you forgot citation X, formula Y has an error, these sentences are confusing, etc. In this part I quote.

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Direct quoting also makes it easier for the authors to search for the phrase in question to implement your changes :) – ThomasH Mar 9 '13 at 21:22

For a review it doesn't matter that much, but it's safer to quote, so that there's no chance of misinterpretation.

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