How Does Popularity Information Affect Choices? A Field Experiment

Abstract:     
Popularity information is usually thought to reinforce existing sales trends by encouraging customers to flock to mainstream products. We propose an opposite hypothesis: popularity information may benefit niche products disproportionately, because the same level of popularity implies higher quality for a niche product than for a mainstream product. We examine this hypothesis empirically using field experiment data from a web site that lists wedding service vendors. Consistent with our hypothesis, we find that popular niche vendors receive more visits than popular mainstream vendors, across several definitions of niche.

Keywords: Popularity Information, Observational Learning, Niche Marketing, Long Tail, Internet Marketing, Field Experiment

JEL Classifications: C93, D83, M31

Working Paper Series