The Value of Platform Endorsement

59 Pages Posted: 29 Jun 2022 Last revised: 3 Apr 2024

See all articles by Mimansa Bairathi

Mimansa Bairathi

University College London

Xu Zhang

London Business School

Anja Lambrecht

London Business School

Date Written: June 23, 2022

Abstract

Many digital platforms with large product assortments endorse a select group of items to facilitate user choice. However, while it seems intuitive that such endorsement may increase the sales of endorsed items, little is known about its effect on unendorsed items, and on the platform. Using data from a field experiment conducted by an online freelance platform, we examine the effect of exposure to platform endorsement on user search and purchase behavior. We find that exposure to platform endorsement increases user search and purchases not only for endorsed services, but also for unendorsed services. We link the increase in search and purchases to an increase in the perception of the quality of services offered on the platform. We further explore heterogeneity in the effect of platform endorsement and find that the effect of exposure to platform endorsement on purchase is more pronounced for users with a higher propensity to purchase. We discuss implications for platforms, merchants, and regulators.

Keywords: Platform endorsement, field experiment, online freelance platform, spillover effects

JEL Classification: C93, L15, L81, L84, M31

Suggested Citation

Bairathi, Mimansa and Zhang, Xu and Lambrecht, Anja, The Value of Platform Endorsement (June 23, 2022). Available at SSRN: https://ssrn.com/abstract=4144605 or http://dx.doi.org/10.2139/ssrn.4144605

Mimansa Bairathi (Contact Author)

University College London ( email )

Gower Street
London, WC1E 6BT
United Kingdom

HOME PAGE: http://https://www.mgmt.ucl.ac.uk/people/mimansabairathi

Xu Zhang

London Business School ( email )

Sussex Place
Regent's Park
London, London NW1 4SA
United Kingdom

HOME PAGE: http://xu-zhang.com/

Anja Lambrecht

London Business School ( email )

Regent's Park
London, NW1 4SA
United Kingdom

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