Learning from Online Social Ties

44 Pages Posted: 13 Jun 2013

See all articles by Yuchi Zhang

Yuchi Zhang

University of Maryland - Robert H. Smith School of Business

David Godes

University of Maryland

Date Written: June 6, 2013

Abstract

We ask whether online opinions impact consumers' decision quality and assess whether this impact occurs immediately or requires one to undergo learning first. We focus on a setting where consumers have multiple learning experiences using opinions from both uni- and bi-directional network ties. This allows us to investigate the impact of learning from both weak and strong ties. We find that, with sufficient learning experience, having more ties may lead to better decisions. However, the dynamic effects are dependent on the strength of the tie. Additional strong ties (operationalized as bi-directional links) lead to immediate positive effects on decision quality. However, additional weak ties (uni-directional, follower relationships) as a source of information lead initially to lower decision quality. We find learning effects, however: adding more weak ties improves decision quality once one has sufficient experience in the community. Indeed, highly-experienced consumers receive, ultimately, higher positive effects on decision quality from weak ties as compared with strong ties. We interpret this as demonstrating that one needs to learn the norms of a new community before using the available information to improve decisions.

Keywords: Word of Mouth, Social Media, Social Networks, Learning

JEL Classification: M30, M31

Suggested Citation

Zhang, Yuchi and Godes, David, Learning from Online Social Ties (June 6, 2013). Available at SSRN: https://ssrn.com/abstract=2277580 or http://dx.doi.org/10.2139/ssrn.2277580

Yuchi Zhang (Contact Author)

University of Maryland - Robert H. Smith School of Business ( email )

College Park, MD 20742-1815
United States

David Godes

University of Maryland ( email )

College Park
College Park, MD 20742
United States

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