The Influence of Information Cascades on Online Purchase Behaviors of Search and Experience Products
The above article talks about how when users shop online, they usually refer to others’ behaviors as well as if items are on sale or not when purchasing items online. The researchers wanted to see how information cascades could influence online purchase behaviors and how they affected the online word-of-mouth and prices of products. They specifically compared what items were searched up and what items were actually purchased. However, results are very limited to the area of China as they used data that came from a BRC e-commerce site in China. So, results cannot be necessarily generalized to a larger population such as the US to describe the online purchase behaviors of users and how information cascade influence user decision making.
Their results showed that users’ final decisions in what items to buy online were heavily influenced by changes in rankings for items after they controlled reviews that other online users left behind as well as product price which is expected according to the information cascade theory. It was also found that the user ratings of people who left behind reviews did not impact the decisions of other users. The price of an item, whether it was high or low, had a significant and negative impact on items with high rankings while the prices had a significant and positive impact on items with low rankings. It is important to note that the researchers did neglect some possible important influential factors such as how famous a brand is, customers’ reputation, and the different styles various stores have on decision making in online purchases.
Upon research, the researchers also incorporated rules we learned in class such as Bayes’ Theorem when they calculated the probability that a second user will also buy item A given that the first user buys item A. They also tested if user 1 purchased item A and user 2 purchased item B, what item would user 3 buy. This is very similar to Problem Set 6 where we did a series of calculations using Bayes’ Theorem but for marbles in a bag. However, the logic behind the calculations the researchers did is the same as what we did in class and for homework, just a different situation, and scenario.