The effect of word of mouth on sales: Online book reviews
| Authors | Chevalier, Mayzlin |
| Journal | Journal of Marketing Research |
| Year | 2006 |
| Type | Published Paper |
| Abstract | The authors examine the effect of consumer reviews on relative sales of books at Amazon.com and Barnesandnoble.com. The authors find that (1) reviews are overwhelmingly positive at both sites, but there are more reviews and longer reviews at Amazon.com; (2) an improvement in a book's reviews leads to an increase in relative sales at that site; (3) for most samples in the study, the impact of one-star reviews is greater than the impact of five-star reviews; and (4) evidence from review-length data suggests that customers read review text rather than relying only on summary statistics. |
| Keywords | Earnings conference calls, investment decisions, nonnative accents, impressions of CEOs |
| URL | https://doi.org/10.1509/jmkr.43.3.345 |
| Tags | Archival Empirical | Consumer Decisions | Media and Textual Analysis |
Clean evidence on peer effects
| Authors | Falk, Ichino |
| Journal | Journal of Labor Economics |
| Year | 2006 |
| Type | Published Paper |
| Abstract | We study subjects who were asked to fill letters into envelopes with a remuneration independent of output. In the "pair" treatment, two subjects worked at the same time in the same room, and peer effects were possible. In the "single" treatment, subjects worked alone, and peer effects were ruled out. We find evidence of peer effects in the pair treatment because the standard deviations of output are smaller within pairs than between pairs. Moreover, average output is higher in the pair treatment: thus, peer effects raise productivity. Finally, low-productivity workers are the most sensitive to the behavior of peers. |
| URL | https://doi.org/10.1086/497818 |
| Tags | Archival Empirical | Manager / Firm Behavior | Productivity Spillovers |
Word of mouth for movies: Its dynamics and impact on box office revenue
| Authors | Liu |
| Journal | Journal of Marketing |
| Year | 2006 |
| Type | Published Paper |
| Abstract | This article uses actual word-of-mouth (WOM) information to examine the dynamic patterns of WOM and how it helps explain box office revenue. The WOM data were collected from the Yahoo Movies Web site. The results show that WOM activities are the most active during a movie's prerelease and opening week and that movie audiences tend to hold relatively high expectations before release but become more critical in the opening week. More important, WOM information offers significant explanatory power for both aggregate and weekly box office revenue, especially in the early weeks after a movie opens. However, most of this explanatory power comes from the volume of WOM and not from its valence, as measured by the percentages of positive and negative messages. |
| Keywords | Strategic disclosure, hedge funds, ownership disclosure, 13F holdings, restatement, fund skill |
| URL | https://www.jstor.org/stable/30162102 |
| Tags | Archival Empirical | Consumer Decisions |
Correlated trading and location
| Authors | Feng, Seasholes |
| Journal | Journal of Finance |
| Year | 2005 |
| Type | Published Paper |
| Abstract | This paper analyzes the trading behavior of stock market investors. Purchases and sales are highly correlated when we divide investors geographically. Investors who live near a firm's headquarters react in a similar manner to releases of public information. We are able to make this identification by exploiting a unique feature of individual brokerage accounts in the People's Republic of China. The data allow us to pinpoint an investor's location at the time he or she places a trade. Our results are consistent with a simple, rational expectations model of heterogeneously informed investors. |
| URL | https://doi.org/10.1111/j.1540-6261.2004.00694.x |
| Tags | Archival Empirical | Financing- and Investment Decisions (Individual) |
Thy neighbor's portfolio: Word-of-mouth effects in the holdings and trades of money managers
| Authors | Hong, Kubik, Stein |
| Journal | Journal of Finance |
| Year | 2005 |
| Type | Published Paper |
| Abstract | A mutual fund manager is more likely to buy (or sell) a particular stock in any quarter if other managers in the same city are buying (or selling) that same stock. This pattern shows up even when the fund manager and the stock in question are located far apart, so it is distinct from anything having to do with local preference. The evidence can be interpreted in terms of an epidemic model in which investors spread information about stocks to one another by word of mouth. |
| Keywords | Word-of-mouth effects, fund managers, trading behaviors |
| URL | https://doi.org/10.1111/j.1540-6261.2005.00817.x |
| Tags | Archival Empirical | Investment Decisions (Institutional) | Manager / Firm Behavior |
Social interaction and stock-market participation
| Authors | Hong, Kubik, Stein |
| Journal | Journal of Finance |
| Year | 2005 |
| Type | Published Paper |
| Abstract | We propose that stock-market participation is influenced by social interaction. In our model, any given "social" investor finds the market more attractive when more of his peers participate. We test this theory using data from the Health and Retirement Study, and find that social households-those who interact with their neighbors, or attend church-are substantially more likely to invest in the market than non-social households, controlling for wealth, race, education, and risk tolerance. Moreover, consistent with a peer-effects story, the impact of sociability is stronger in states where stock-market participation rates are higher. |
| URL | https://doi.org/10.1111/j.1540-6261.2004.00629.x |
| Tags | Archival Empirical | Financing- and Investment Decisions (Individual) |
Thy neighbor's portfolio: word-of-mouth effects in the holdings and trades of money managers
| Authors | Hong, Kubik, Stein |
| Journal | Journal of Finance |
| Year | 2005 |
| Type | Published Paper |
| Abstract | A mutual fund manager is more likely to buy (or sell) a particular stock in any quarter if other managers in the same city are buying (or selling) that same stock. This pattern shows up even when the fund manager and the stock in question are located far apart, so it is distinct from anything having to do with local preference. The evidence can be interpreted in terms of an epidemic model in which investors spread information about stocks to one another by word of mouth. |
| Keywords | Word-of-mouth effects, Fund managers, Trading behaviors |
| URL | https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1540-6261.2005.00817.x |
| Tags | Archival Empirical | Investment Decisions (Institutional) | Manager / Firm Behavior |
Social interaction and stock-market participation
| Authors | Hong, Kubic, Stein |
| Journal | The Journal of Finance |
| Year | 2004 |
| Type | Published Paper |
| Abstract | We propose that stock-market participation is influenced by social interaction. In our model, any given "social" investor finds the market more attractive when more of his peers participate. We test this theory using data from the Health and Retirement Study, and find that social households - those who interact with their neighbors, or attend church - are substantially more likely to invest in the market than non-social households, controlling for wealth, race, education, and risk tolerance. Moreover, consistent with a peer-effects story, the impact of sociability is stronger in states where stock-market participation rates are higher. |
| Keywords | Social interaction, household investment decisions, word-of-mouth effect, enjoyment-from-talking-about-the-market, peer effects |
| URL | https://doi.org/10.1111/j.1540-6261.2004.00629.x |
| Tags | Archival Empirical | Financing- and Investment Decisions (Individual) | Social Network Structure |
The role of information and social interactions in retirement plan decisions: Evidence from a randomized experiment
| Authors | Duflo, Saez |
| Journal | Quarterly Journal of Economics |
| Year | 2003 |
| Type | Published Paper |
| Abstract | This paper analyzes a randomized experiment to shed light on the role of information and social interactions in employees' decisions to enroll in a Tax Deferred Account (TDA) retirement plan within a large university. The experiment encouraged a random sample of employees in a subset of departments to attend a benefits information fair organized by the university, by promising a monetary reward for attendance. The experiment multiplied by more than five the attendance rate of these treated individuals (relative to controls), and tripled that of untreated individuals within departments where some individuals were treated. TDA enrollment five and eleven months after the fair was significantly higher in departments where some individuals were treated than in departments where nobody was treated. However, the effect on TDA enrollment is almost as large for individuals in treated departments who did not receive the encouragement as for those who did. We provide three interpretations-differential treatment effects, social network effects, and motivational reward effects-to account for these results. |
| URL | https://academic.oup.com/qje/article-abstract/118/3/815/1943005 |
| Tags | Archival Empirical | Financing- and Investment Decisions (Individual) |
Participation and investment decisions in a retirement plan: The influence of colleagues' choices
| Authors | Duflo, Saez |
| Journal | Journal of Public Economics |
| Year | 2002 |
| Type | Published Paper |
| Abstract | This paper investigates whether peer effects play an important role in retirement savings decisions. We use individual data from employees of a large university to study whether individual decisions to enroll in a Tax Deferred Account plan sponsored by the university, and the choice of the mutual fund vendor for people who choose to enroll, are affected by the decisions of other employees in the same department. To overcome the identification problems, we divide the departments into sub-groups (along gender, status, age, and tenure lines) and we instrument the average participation of each peer group by the salary or tenure structure in this group. Our results suggest that peer effects may be an important determinant of savings decisions. |
| Keywords | Peer effects, retirement saving plans |
| URL | https://www.sciencedirect.com/science/article/abs/pii/S0047272701000986 |
| Tags | Archival Empirical | Financing- and Investment Decisions (Individual) |
Negativity bias, negativity dominance, and contagion
| Authors | Rozin, Royzman |
| Journal | Personality and Social Psychology Review |
| Year | 2001 |
| Type | Published Paper |
| Abstract | We hypothesize that there is a general bias, based on both innatepredispositions and experience, in animals and humans, to give greater weight to negative entities (e.g., events, objects, personal traits). This is manifested in 4 ways: (a) negative potency (negative entities are stronger than the equivalent positive entities), (b) steeper negative gradients (the negativity of negative events grows more rapidly with approach to them in space or time than does the positivity of positive events, (c) negativity dominance (combinations of negative and positive entities yield evaluations that are more negative than the algebraic sum of individual subjective valences would predict), and (d) negative differentiation (negative entities are more varied, yield more complex conceptual representations, and engage a wider response repertoire). We review evidence for this taxonomy, with emphasis on negativity dominance, including literary, historical, religious, and cultural sources, as well as the psychological literatures on learning, attention, impression formation, contagion, moral judgment, development, and memory. We then consider a variety of theoretical accounts for negativity bias. We suggest that 1 feature of negative events that make them dominant is that negative entities are more contagious than positive entities. |
| URL | https://doi.org/10.1207/S15327957PSPR0504_2 |
| Tags | Archival Empirical | Experimental / Survey-Based Empirical | Media and Textual Analysis | Social Transmission Biases |
Work environment and individual background: Explaining regional shirking differentials in a large Italian firm
| Authors | Ichino, Maggi |
| Journal | Quarterly Journal of Economics |
| Year | 2000 |
| Type | Published Paper |
| Abstract | The prevalence of shirking within a large Italian bank appears to be characterized by significant regional differentials. In particular, absenteeism and misconduct episodes are substantially more prevalent in the south. We consider a number of potential explanations for this fact: different individual backgrounds; group-interaction effects; sorting of workers across regions; differences in local attributes; different hiring policies; and discrimination against southern workers. Our analysis suggests that individual backgrounds, group-interaction effects, and sorting effects contribute to explaining the north-south shirking differential. None of the other explanations appears to be of first-order importance. |
| URL | https://doi.org/10.1162/003355300554890 |
| Tags | Archival Empirical | Propagation of Noise / Undesirable Outcomes |
The effect of socially activist investment policies on the financial markets: Evidence from the South African boycott
| Authors | Teoh, Welch, Wazzan |
| Journal | Journal of Business |
| Year | 1999 |
| Type | Published Paper |
| Abstract | We study the most important legislative and shareholder boycott to date, the boycott of South Africa's apartheid regime, and find that corporate involvement with South Africa was so small that the announcement of legislative/shareholder pressure or voluntary corporate divestment from South Africa had little discernible effect either on the valuation of banks and corporations with South African operations or on the South African financial markets. There is weak evidence that institutional shareholdings increased when corporations divested. In sum, despite the publicity of the boycott and the multitude of divesting companies, political pressure had little visible effect on the financial markets. |
| Keywords | Boycott, shareholder pressure, corporate divestment, firm valuation |
| URL | https://doi.org/10.1086/209602 |
| Tags | Archival Empirical | Asset Pricing, Trading Volume and Market Efficiency | Investment Decisions (Institutional) | Manager / Firm Behavior |
Stock prices and social dynamics
| Authors | Shiller, Fischer, Friedman |
| Journal | Brookings papers on economic activity |
| Year | 1984 |
| Type | Published Paper |
| Keywords | Social movements, social psychology, group pressure, fashions, fads, stock prices |
| URL | https://www.jstor.org/stable/2534436 |
| Tags | Archival Empirical | Asset Pricing, Trading Volume and Market Efficiency | Financing- and Investment Decisions (Individual) | Theory |