NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Observational Learning: Evidence from a Randomized Natural Field Experiment

Hongbin Cai, Yuyu Chen, Hanming Fang

NBER Working Paper No. 13516
Issued in October 2007
NBER Program(s):   LS   PE

We present results about the effects of observing others' choices, called observational learning, on individuals' behavior and subjective well-being in the context of restaurant dining from a randomized natural field experiment. Our experimental design aims to distinguish observational learning effect from saliency effect (because observing others' choices also makes these choices more salient). We find that, depending on specifications, the demand for the top 5 dishes was increased by an average of about 13 to 18 percent when these popularity rankings were revealed to the customers; in contrast, being merely mentioned as some sample dishes did not significantly boost their demand. Moreover, we find that, consistent with theoretical predictions, some modest evidence that observational learning effect was stronger among infrequent customers. We also find that customers' subjective dining experiences were improved when presented with the information about the top choices by other consumers, but not when presented with the names of some sample dishes.

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Document Object Identifier (DOI): 10.3386/w13516

Published: Hongbin Cai & Yuyu Chen & Hanming Fang, 2009. "Observational Learning: Evidence from a Randomized Natural Field Experiment," American Economic Review, American Economic Association, vol. 99(3), pages 864-82, June. citation courtesy of

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