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Demand effects of consumers’ stated and revealed preferences

Per Engström () and Eskil Forsell ()
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Eskil Forsell: Department of Economics, Postal: Uppsala University, P.O. Box 513, SE-751 20 Uppsala, Sweden

No 2013:6, Working Paper Series from Uppsala University, Department of Economics

Abstract: Knowledge of how consumers react to different quality signals is fundamental for understanding how markets work. We study the online market- place for Android apps where we compare the causal effects on demand from two quality related signals; other consumers' stated and revealed preferences toward an app. Our main result is that consumers are much more responsive to other consumers' revealed preferences, compared to others' stated preferences. A 10 percentile increase in displayed average rating only increases downloads by about 3 percent, while a 10 percentile increase in displayed number of downloads increases downloads by about 20 percent.

Keywords: peer effects; observational Learning; stated preferences; revealed preferences; eWOM; Google play; Android apps; regression discontinuity design; instrumental variable analysis (search for similar items in EconPapers)
JEL-codes: C21 C26 D83 M31 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2013-04-19
New Economics Papers: this item is included in nep-cbe and nep-mkt
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