Observational Learning: Evidence from a Randomized Natural Field Experiment / Hongbin Cai, Yuyu Chen, Hanming Fang.

Format:

Book

Author/Creator:

Cai, Hongbin.

Contributor:

National Bureau of Economic Research.

Chen, Yuyu.

Fang, Hanming.

Series:

Working Paper Series (National Bureau of Economic Research) no. w13516.

NBER working paper series no. w13516

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Observational Learning

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2007.

Summary:

We present results about the effects of observing others' choices, called observational learning, on individuals' behavior and subjective well-being in the context of restaurant dining from a randomized natural field experiment. Our experimental design aims to distinguish observational learning effect from saliency effect (because observing others' choices also makes these choices more salient). We find that, depending on specifications, the demand for the top 5 dishes was increased by an average of about 13 to 18 percent when these popularity rankings were revealed to the customers; in contrast, being merely mentioned as some sample dishes did not significantly boost their demand. Moreover, we find that, consistent with theoretical predictions, some modest evidence that observational learning effect was stronger among infrequent customers. We also find that customers' subjective dining experiences were improved when presented with the information about the top choices by other consumers, but not when presented with the names of some sample dishes.

Notes:

Print version record

October 2007.