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Observational Learning: Evidence from a Randomized Natural Field Experiment

  • Hongbin Cai
  • Yuyu Chen
  • Hanming Fang

We report results from a randomized natural field experiment conducted in a restaurant dining setting to distinguish the observational learning effect from the saliency effect. We find that, when customers are given ranking information of the five most popular dishes, the demand for those dishes increases by 13 to 20 percent. We do not find a significant saliency effect. We also find modest evidence that the observational learning effects are stronger among infrequent customers, and that dining satisfaction is increased when customers are presented with the information of the top five dishes, but not when presented with only names of some sample dishes. (JEL C93, D83)

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Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 99 (2009)
Issue (Month): 3 (June)
Pages: 864-82

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Handle: RePEc:aea:aecrev:v:99:y:2009:i:3:p:864-82
Note: DOI: 10.1257/aer.99.3.864
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  1. Duflo, Esther & Saez, Emmanuel, 2002. "Participation and investment decisions in a retirement plan: the influence of colleagues' choices," Journal of Public Economics, Elsevier, vol. 85(1), pages 121-148, July.
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  12. Sushil Bikhchandani & David Hirshleifer & Ivo Welch, 1998. "Learning from the Behavior of Others: Conformity, Fads, and Informational Cascades," Journal of Economic Perspectives, American Economic Association, vol. 12(3), pages 151-170, Summer.
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