Herd behavior in purchasing books online
Link: https://www.sciencedirect.com/science/article/pii/S0747563207001458
In the attached article the author discusses four studies done on the effects of other purchasers when people buy books online. Each of the studies looks either at the effects of normal cues in the book industry, specifically star ratings and sales volumes, or at the effectiveness of different recommendation sources. The overall motive behind these studies was to see how the behavior of previous consumers effects the behavior of people making purchasing decisions for the first time. The results found that people are generally more likely to purchase a book if it has a higher star rating, and if more people have purchased the book in the past compared to other, similar books.
This most closely relates to the material we learned on class about information cascades. The number of people who have purchased a book is an example of a behavior of other consumers that can be observed by later consumers without knowing the original signals that the previous purchasers received. Once a large enough number of people have purchased the book, our studies of information cascades would indicate that consumers would likely purchase that book regardless of their own signals about it. This was confirmed in the study by the fact that consumers were in fact more likely to purchase a book that a lot of previous consumers have purchased. One could also make the argument that there are direct-benefit reasons for this, as people often get enjoyment out of discussing books with others. If someone knows that more people have purchased the book they will know that more people will be able to discuss it with them once they have finished the book. Both these information based reasons and direct benefit reasons are well within the scope of this class.