Social Learning in Prosumption: Evidence from a Randomized Field Experiment

Abstract

Digital technologies enable consumers to actively participate in the design and production process for a wide range of products, giving rise to the concept of a ‘prosumer.’ A significant portion of the value for such products is generated through the prosumption process. A variety of firms are investing in building such capabilities, however, a major, largely unexplored, friction in prosumption is the customers’ effort involved to undertake a creative exercise of designing products and extracting value from the process. In this study, we ask whether and how social learning—the act of showing creations made by other customers to focal customers—can ameliorate such friction. Arguably, by showing others’ product designs to focal customers, especially if such designs are attractive and of high quality, the firm may entice users to initiate the design process. Showing others’ designs is also likely to influence customers’ beliefs about their own ability—their self-efficacy—to design a valuable product that they would like to purchase. Certain designs may be perceived as out of the creative reach of focal users and therefore reduce their likelihood of finishing the design and purchasing it. How does this understanding vary across different stages of the purchase funnel? In close collaboration with an e-commerce platform that specializes in customized photo products, we examine the effectiveness of social learning by means of two large scale in-vivo randomized field experiments. We exogenously vary both the availability of others’ designs and the characteristics of the images shown to the treated users. Our analysis shows that showing other users’ designs as examples can be highly effective in influencing the purchase and design behavior of focal customers, but firms must choose the right customers and carefully select the type of user image design for display. In the upper stages of the purchase funnel, showing high-quality designs to these customers significantly increases the likelihood of project creation. Lower down in the funnel the self-efficacy effect dominates, and users are more likely to finish designs and purchase products when shown designs that are easy to learn.

Keywords: prosumption, prosumer, social learning, self-efficacy, randomized control trials, machine learning with causal inference