Observational Learning: Evidence from a Randomized Natural Field Experiment

Hongbin Cai (), Yuyu Chen () and Hanming Fang ()

No 13516, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: 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.

JEL-codes: C93 D83 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cbe and nep-exp
Date: 2007-10
Note: LS PE
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Journal Article: Observational Learning: Evidence from a Randomized Natural Field Experiment (2009)
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