Observational Learning: Evidence from a Randomized Natural Field Experiment

Cai, Hongbin; Chen, Yuyu; Fang, Hanming

doi:10.1257/aer.99.3.864

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American Economic Review: Vol. 99 No. 3 (June 2009)

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Observational Learning: Evidence from a Randomized Natural Field Experiment

Article Citation

Cai, Hongbin, Yuyu Chen, and Hanming Fang. 2009. "Observational Learning: Evidence from a Randomized Natural Field Experiment." American Economic Review, 99(3): 864-82.

DOI: 10.1257/aer.99.3.864

Abstract

We report results from a randomized natural field experiment conducted in a restaurant dining setting to distinguish the observational learning effect from the saliency effect. We find that, when customers are given ranking information of the five most popular dishes, the demand for those dishes increases by 13 to 20 percent. We do not find a significant saliency effect. We also find modest evidence that the observational learning effects are stronger among infrequent customers, and that dining satisfaction is increased when customers are presented with the information of the top five dishes, but not when presented with only names of some sample dishes. (JEL C93, D83)

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Download Data Set (8.42 MB) | Online Appendix (244.83 KB)

Authors

Cai, Hongbin (Peking U)
Chen, Yuyu (Peking U)
Fang, Hanming (Duke U)

JEL Classifications

C93: Field Experiments
D83: Search; Learning; Information and Knowledge; Communication; Belief