Observational Learning: Evidence from a Randomized Natural Field Experiment

American Economic Review, Vol. 99, No. 3, pp. 864–882, 2009

Posted: 7 Jan 2011

See all articles by Hongbin Cai

Hongbin Cai

Peking University - Guanghua School of Management

Yuyu Chen

Peking University - Guanghua School of Management

Hanming Fang

University of Pennsylvania - Department of Economics; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: 2009

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.

Keywords: field experiment, China, observational learning effect, saliency effect

JEL Classification: C93, D83

Suggested Citation

Cai, Hongbin and Chen, Yuyu and Fang, Hanming, Observational Learning: Evidence from a Randomized Natural Field Experiment (2009). American Economic Review, Vol. 99, No. 3, pp. 864–882, 2009 . Available at SSRN: https://ssrn.com/abstract=1734780

Hongbin Cai

Peking University - Guanghua School of Management ( email )

Peking University
Beijing, Beijing 100871
China

Yuyu Chen

Peking University - Guanghua School of Management ( email )

Peking University
Beijing, Beijing 100871
China

Hanming Fang (Contact Author)

University of Pennsylvania - Department of Economics ( email )

Ronald O. Perelman Center for Political Science
133 South 36th Street
Philadelphia, PA 19104-6297
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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