IDEAS home Printed from https://ideas.repec.org/a/inm/ororsc/v32y2021i4p1079-1099.html
   My bibliography  Save this article

When Reinforcing Processes Generate an Outcome-Quality Dip

Author

Listed:
  • Jerker Denrell

    (Warwick Business School, University of Warwick, Coventry CV4 7AL, United Kingdom)

  • Chengwei Liu

    (European School of Management and Technology (ESMT) Berlin, 10178 Berlin, Germany)

Abstract

When does market success indicate superior merit? We show that when consumer choices between products with equal prices depend on quality but also on past popularity, more popular products are not necessarily of higher quality. Rather, a medium level of popularity may be associated with lower quality than lower levels of popularity. Using a formal model, we show that this kind of nonmonotonic association occurs when reinforcing processes are strong. More generally, a dip can occur when outcomes depend on both quality and resources and the latter are allocated bimodally, with some being given a lot of resources and most receiving little. Empirically, we illustrate that such a dip occurs in the association between movie theater sales and ratings. The presence of a dip in the outcome-quality association complicates learning from market outcomes and evaluation of individuals and new ventures, challenges the legitimacy of stratification systems, and creates opportunities for sophisticated evaluators who understand the dip.

Suggested Citation

  • Jerker Denrell & Chengwei Liu, 2021. "When Reinforcing Processes Generate an Outcome-Quality Dip," Organization Science, INFORMS, vol. 32(4), pages 1079-1099, July.
    • Handle: RePEc:inm:ororsc:v:32:y:2021:i:4:p:1079-1099
    DOI: 10.1287/orsc.2020.1414
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1287/orsc.2020.1414
    Download Restriction: no
    File URL: https://libkey.io/10.1287/orsc.2020.1414?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:inm:ororsc:v:32:y:2021:i:4:p:1079-1099. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Asher (email available below). General contact details of provider: https://edirc.repec.org/data/inforea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.