Online shopping: How product reviews cause information cascades
Many people prefer to shop online instead of visiting stores. “The influence of information cascades on online purchase behavior of search and experience products” describes how information cascades affect individuals’ online purchases. The article discusses the large amount of information that is offered to online shoppers regarding “other users’ choices and product popularity.” This wealth of information (specifically product reviews) causes information cascades. The results of the study show that the number of product reviews on a lowly ranked item impacts the likelihood of someone purchasing that product.
This relates to our discussions in lecture about information cascades. The study discusses how online shoppers are likely to consider “others’ behaviors” more heavily than their own information when shopping online. This observation connects directly to the conversations in lecture about ignoring one’s own observations or beliefs and acting on the behavior (or expected behavior) of others. If someone is shopping online and finds a product they really like, but the reviews are negative, they may not buy it. This exemplifies information based reasoning; the shopper assumes that the reviewers have some knowledge of the product that they themselves do not have. This can cause an information cascade, in which people do not buy the product. This information cascade may be based off of false information. There is a possibility that only shoppers with bad experiences review the product. There are many ways that information cascades can begin on online shopping sites and affect the purchases the individuals make.
Article: http://link.springer.com.proxy.library.cornell.edu/article/10.1007%2Fs10660-016-9220-0