Information Cascades with Informative Ratings: An Experimental Test

Paul Healy (), John Conlon () and Yeochang Yoon ()
Additional contact information
John Conlon: Department of Economics, Ohio State University
Yeochang Yoon: Department of Economics, Ohio State University

No 16-05, Working Papers from Ohio State University, Department of Economics

Abstract: We study behavior in an information cascades setting where previous buyers of the product leave noisy but informative ratings of the product. Although this increases the amount of public information available, Yoon (2015, working paper) shows that ratings can actually increase the frequency of cascades in which buyers do not purchase even though the product is of high quality. This occurs because non-buyers do not leave ratings. Although we find some evidence roughly in line with the theory, those results are swamped by a strong tendency for subjects to purchase even when public information suggests they should not.

Keywords: Information Cascades; Herding; Activity Bias (search for similar items in EconPapers)
JEL-codes: C92 D03 D83 (search for similar items in EconPapers)
Pages: 30 Pages
Date: 2016-05
New Economics Papers: this item is included in nep-exp
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.econ.ohio-state.edu/pdf/healy/wp16-05.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:osu:osuewp:16-05

Access Statistics for this paper

More papers in Working Papers from Ohio State University, Department of Economics 410 Arps Hall 1945 North High Street Columbus, Ohio 43210-1172.
Bibliographic data for series maintained by John Slaughter ().