Observational Learning Effect

Observational Learning Effect

Reviewed by Faisal Zaidi

The inference of quality from what others have chosen.

What it is

Cai, Chen and Fang designed a restaurant field experiment to tell it apart from a saliency effect, in which a prominent item sells better because it is easy to see. They found no significant saliency effect. It is drawn from work by Hongbin Cai, Yuyu Chen and Hanming Fang (2009).

In effect

In the article on why we order the most popular dish, it is used to explain why a ranking of popular dishes lifted demand.

What it does not say

The experiment separated this inference from the effect of simply being easy to see. It does not say that diners always follow what others chose, and the evidence rating is mixed.

Sources

  1. Cai, H., Chen, Y., & Fang, H. (2009). Observational learning: Evidence from a randomized natural field experiment. American Economic Review, 99(3), 864-882.