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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. Bayer, Patrick & Ross, Stephen L., 2005. "Place of Work and Place of Residence: Informal Hiring Networks and Labor Market Outcomes," Working Papers 8, Yale University, Department of Economics.
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  6. Conley, T.G. & Udry, C.R., 2000. "Learning about a New Technology: Pineapple in Ghana," Papers 817, Yale - Economic Growth Center.
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  20. repec:pri:rpdevs:besley_case_diffusion.pdf is not listed on IDEAS
  21. Chamley,Christophe P., 2004. "Rational Herds," Cambridge Books, Cambridge University Press, number 9780521530927, November.
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