How Digital Word-of-Mouth Affects Consumer Decision Making: Evidence from Doctor Appointment Booking
51 Pages Posted: 12 May 2016 Last revised: 25 Jan 2019
Date Written: Nov 11, 2018
This paper presents the first study that utilizes detailed clickstream data on online Word-of-Mouth to uncover mechanisms underlying its influence on consumer decision making. We leverage a feature launch on a major doctor appointment booking platform to study the impacts of online WOM on three dimensions of a consumer’s choice process: the consideration set size, the time taken to consider alternatives (web session duration), and the geographic dispersion among the choices considered. We further investigate the effects of online WOM on demand. We have several novel findings. First, the impacts of WOM on the decision-making processes are not monotonic, but rather are contingent on the density of WOM (number of rated doctors) in a market. When the density of WOM is low, the availability of WOM makes patients consider more doctors, browse for a longer duration, and consider doctors that are geographically more dispersed. In contrast, when the density of WOM is high, the availability of WOM makes patients consider fewer doctors, browse for a shorter duration, and focus on doctors that are geographically more proximate. Finally, our results show that the presence of WOM can have a cannibalization effect: when the ratings are published, the highly rated doctors reap the benefits (in the form of increased demand) at the expense of unrated doctors. Our study contributes to extant literature on online WOM by providing new insights through which WOM influences consumer decision making at a new level of granularity..
Keywords: Online ratings, consumer decision making, physician quality, online word-of-mouth, natural experiment, consideration set, location choice
JEL Classification: M01
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