Money Talks: Field Experiment Evidence Regarding Online Referral Propensities

42 Pages Posted: 21 Jan 2007

See all articles by Mengze Shi

Mengze Shi

University of Toronto - Rotman School of Management

Andrea C. Wojnicki

University of Toronto

Date Written: January 17, 2007

Abstract

This paper investigates the impact of various motivational tactics - tangible or intangible and selfish or altruistic - on online referral rates, utilizing a unique dataset matching a large-scale survey with an online field experiment. The authors develop an economic model of referral and derive a tobit model for estimation. Overall, the empirical results of the model indicate that "money talks" - that is, referral rates are higher when tangible rewards are conferred, particularly tangible and selfish tactics, particularly for Internet Opinion Leaders, and particularly for males. However, for target segments with higher education levels, when intangible or psychological benefits are emphasized, tactics more altruistic in nature are more effective than tactics that are more selfish in nature. Importantly, the authors demonstrate how our model and analysis can help managers design optimal WOM campaigns, depending on their consumer profile.

Keywords: word-of-mouth, referral reward programs, opinion leadership, Internet marketing, field experiment

JEL Classification: M31, M37, M39

Suggested Citation

Shi, Mengze and Wojnicki, Andrea C., Money Talks: Field Experiment Evidence Regarding Online Referral Propensities (January 17, 2007). Available at SSRN: https://ssrn.com/abstract=958290 or http://dx.doi.org/10.2139/ssrn.958290

Mengze Shi (Contact Author)

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

Andrea C. Wojnicki

University of Toronto ( email )

Toronto, Ontario M5S 3G8
Canada

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