Working Paper: NBER ID: w13516
Authors: Hongbin Cai; Yuyu Chen; Hanming Fang
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.
Keywords: Observational Learning; Field Experiment; Consumer Behavior
JEL Codes: C93; D83
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| revealing popularity rankings of the top 5 dishes (Y10) | increases demand for these dishes (R22) |
| customers are influenced by the choices of others (D16) | increases demand for these dishes (R22) |
| being merely mentioned as sample dishes (Y60) | does not significantly boost demand (R22) |
| observational learning effect is stronger among infrequent customers (C92) | improves subjective dining experiences (D12) |