Social networks and credit supply and demand
| Authors | Allen, Peng, Shan |
| Year | 2020 |
| Type | Working Paper |
| Abstract | Social networks are associated with the demand for and supply of consumer and small business loans originated on lending marketplaces. Loan demand increases substantially with past borrowing activities of geographically distant but socially connected areas, with an elasticity of 0.21. Borrower-area social proximity to deposits increases funding likelihood by 5.61% and improves ex-post loan performance. We establish causality with granular instrumental variables obtained from natural disasters (demand-side) and financial adviser misconduct (supply-side). The results suggest social networks improve capital allocation by increasing the awareness of alternative lending platforms and facilitating the transmission of less accessible information complementary to loan-specific data. |
| Keywords | Social network, online lending marketplaces, credit demand and supply, information transmission |
| URL | https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3537714 |
| Tags | Archival Empirical | Consumer Decisions | Financing- and Investment Decisions (Individual) | Social Network Structure |
Crowdsourcing financial information to change spending behavior
| Authors | D'Acunto, Rossi, Weber |
| Year | 2019 |
| Type | Working Paper |
| Abstract | We document five effects of providing individuals with crowdsourced spending information about their peers (individuals with similar characteristics) through a FinTech app. First, users who spend more than their peers reduce their spending significantly, whereas users who spend less keep constant or increase their spending. Second, users' distance from their peers' spending affects the reaction monotonically in both directions. Third, users' reaction is asymmetric - spending cuts are three times as large as increases. Fourth, lower-income users react more than others. Fifth, discretionary spending drives the reaction in both directions and especially cash withdrawals, which are commonly used for incidental expenses and anonymous transactions. We argue Bayesian updating, peer pressure, or the fact that bad news looms more than (equally-sized) good news cannot alone explain all these facts. |
| Keywords | FinTech, learning, beliefs and expectations, peer pressure, financial decision-making, saving, consumer finance |
| URL | https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3348722 |
| Tags | Archival Empirical | Consumer Decisions | Financing- and Investment Decisions (Individual) | Social Network Structure |
Status goods: Experimental evidence from platinum credit cards
| Authors | Bursztyn, Ferman, Fiorin, Kanz, Rao |
| Journal | Quarterly Journal of Economics |
| Year | 2018 |
| Type | Published Paper |
| Abstract | This article provides field-experimental evidence on status goods. We work with an Indonesian bank that markets platinum credit cards to high-income customers. In a first experiment, we show that demand for the platinum card exceeds demand for a nondescript control product with identical benefits, suggesting demand for the pure status aspect of the card. Transaction data reveal that platinum cards are more likely to be used in social contexts, implying social image motivations. In a second experiment, we provide evidence of positional externalities from the consumption of these status goods. A final experiment provides suggestive evidence that increasing self-esteem causally reduces demand for status goods,indicating that social image might be a substitute for self-image. |
| Keywords | Social status, consumer behavior, self-esteem, positional externalities |
| URL | https://doi.org/10.1093/qje/qjx048 |
| Tags | Consumer Decisions | Experimental / Survey-Based Empirical |
The effect of social density on word of mouth
| Authors | Consiglio, Angelis, Costabile |
| Journal | Journal of Consumer Research |
| Year | 2018 |
| Type | Published Paper |
| Abstract | This research investigates whether a contextual factor-social density, defined as the number of people in a given area-influences consumers' propensity to share information. We propose that high- (vs. low-) density settings make consumers experience a loss of perceived control, which in turn makes them more likely to engage in word of mouth to restore it. Six studies, conducted online as well as in laboratory and naturalistic settings, provide support for this hypothesis. We demonstrate that social density increases the likelihood of sharing information with others and that a person's chronic need for control moderates this effect. Consistent with the proposed process, the effect of social density on information sharing is attenuated when participants have the opportunity to restore control before they engage in word of mouth. We also provide evidence that sharing information restores perceived control in high-density environments, and we disentangle the effect of social density from that of physical proximity. |
| Keywords | Social density, compensatory control, word of mouth |
| URL | https://doi.org/10.1093/jcr/ucy009 |
| Tags | Consumer Decisions | Experimental / Survey-Based Empirical |
What happens in vegas stays on TripAdvisor? A theory and technique to understand narrativity in consumer reviews
| Authors | Laer, Escalas, Ludwig, Hende |
| Journal | Journal of Consumer Research |
| Year | 2018 |
| Type | Published Paper |
| Abstract | Many consumers base their purchase decisions on online consumer reviews. An overlooked feature of these texts is their narrativity: the extent to which they tell a story. The authors construct a new theory of narrativity to link the narrative content and discourse of consumer reviews to consumer behavior. They also develop from scratch a computerized technique that reliably determines the degree of narrativity of 190,461 verbatim, online consumer reviews and validate the automated text analysis with two controlled experiments. More transporting (i.e., engaging) and persuasive reviews have better-developed characters and events as well as more emotionally changing genres and dramatic event orders. This interdisciplinary, multimethod research should help future researchers (1) predict how narrativity affects consumers' narrative transportation and persuasion, (2) measure the narrativity of large digital corpora of textual data, and (3) understand how this important linguistic feature varies along a continuum. |
| Keywords | Automated text analysis, computational linguistics, consumer reviews, narrative persuasion, narrative transportation, storytelling |
| URL | https://doi.org/10.1093/jcr/ucy067 |
| Tags | Archival Empirical | Consumer Decisions | Media and Textual Analysis | Theory |
Partisan bias, economic expectations, and household spending
| Authors | Mian, Sufi, Khoshkhou |
| Year | 2018 |
| Type | Working Paper |
| Abstract | The well-documented rise in political polarization among the U.S. electorate over the past 20 years has been accompanied by a substantial increase in the effect of partisan bias on survey-based measures of economic expectations. Individuals have a more optimistic view on future economic conditions when they are more closely affiliated with the party that controls the White House, and this tendency has increased significantly over time. Individuals report a large shift in economic expectations based on partisan affiliation after the 2008 and 2016 elections, but administrative data on spending shows no effect of these shifts on actual household spending. |
| Keywords | Consumer confidence, government, economic, policy, sentiment, news, noise, spending, consumption, elections, voting, polarization, Trump, elections |
| URL | https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2620828 |
| Tags | Archival Empirical | Consumer Decisions | Experimental / Survey-Based Empirical |
Causal inference in word-of-mouth research: methods and results
| Authors | Seiler, Yao, Zervas |
| Book | Customer Analytics for Maximum Impact: Academic Insights and Business Use Cases |
| Year | 2018 |
| Type | Book | Literature Review Paper |
| Abstract | One of the biggest changes in the marketing landscape in recent years has been a shift toward fostering word-of-mouth (WOM) to let consumers advocate on a brand's behalf. Many marketing executives consider online WOM, which has increased dramatically in volume in recent years, one of the most effective forms of marketing. Every second, 6,000 tweets are posted on Twitter, and that volume is growing at around 30% per year. Similar patterns apply to other social media platforms such as Facebook, as well as to platforms that host costumer reviews. TripAdvisor and Yelp host 570 million and 142 million reviews, respectively, and are visited by 455 million and 188 million users each month. However, reliably measuring the impact of WOM on demand is subject to some unique challenges, and many marketing managers admit that measuring WOM effectiveness remains difficult. In this chapter, we outline the current state of the academic literature regarding the impact of online WOM on demand. We first outline measurement challenges in the realm of WOM and how they can be resolved. We then summarize recent findings on the effectiveness of WOM in two domains: customer reviews and online conversations about brands on platforms such as Twitter or other social media. The former are a type of activity that typically occur after consumption and that impose a specific structure (often a rating scale) on consumers' WOM. The latter instead are less structured and can take place before and/or after consumption. These two areas are sufficiently different and shall be treated separately. |
| URL | http://people.bu.edu/zg/publications/wom-causal-inference.pdf |
| Tags | Archival Empirical | Consumer Decisions | Media and Textual Analysis |
Tweeting as a marketing tool: A field experiment in the TV industry
| Authors | Gong, Zhang, Zhao, Jiang |
| Journal | Journal of Marketing Research |
| Year | 2017 |
| Type | Published Paper |
| Abstract | Many businesses today have adopted tweeting as a new form of product marketing. However, whether and how tweeting affects product demand remains inconclusive. The authors explore this question using a randomized field experiment on Sina Weibo, the top tweeting website in China. The authors collaborate with a major global media company and examine how the viewing of its TV shows is affected by (1) the media company's tweets about its shows, and (2) recruited Weibo influentials' retweets of the company tweets. The authors find that both company tweets and influential retweets increase show viewing, but in different ways. Company tweets directly boost viewing, whereas influential retweets increase viewing if the show tweet is informative. Meanwhile, influential retweets are more effective than company tweets in bringing new Weibo followers to the company, which indirectly increases viewing. The authors discuss recommendations on how to manage tweeting as a marketing tool. |
| Keywords | Tweet, social media marketing, social media return on investment, field experiment, television |
| URL | https://doi.org/10.1509/jmr.14.0348 |
| Tags | Archival Empirical | Consumer Decisions | Manager / Firm Behavior | Media and Textual Analysis |
How language shapes word of mouth's impact
| Authors | Packard, Berger |
| Journal | Journal of Marketing Research |
| Year | 2017 |
| Type | Published Paper |
| Abstract | Word of mouth affects consumer behavior, but how does the language used in word of mouth shape that impact? Might certain types of consumers be more likely to use certain types of language, affecting whose words have more influence? Five studies, including textual analysis of more than 1,000 online reviews, demonstrate that compared to more implicit endorsements (e.g., "I liked it," "I enjoyed it"), explicit endorsements (e.g., "I recommend it") are more persuasive and increase purchase intent. This occurs because explicit endorsers are perceived to like the product more and have more expertise. Looking at the endorsement language consumers actually use, however, shows that while consumer knowledge does affect endorsement style, its effect actually works in the opposite direction. Because novices are less aware that others have heterogeneous product preferences, they are more likely to use explicit endorsements. Consequently, the endorsement styles novices and experts tend to use may lead to greater persuasion by novices. These findings highlight the important role that language, and endorsement styles in particular, plays in shaping the effects of word of mouth. |
| Keywords | Word of mouth, language, persuasion, consumer knowledge, social perception |
| URL | https://doi.org/10.1509/jmr.15.0248 |
| Tags | Archival Empirical | Consumer Decisions | Media and Textual Analysis | Social Transmission Biases |
Does online word-of-mouth increase demand? (and how?) Evidence from a natural experiment
| Authors | Seiler, Yao, Wang |
| Journal | Marketing Science |
| Year | 2017 |
| Type | Published Paper |
| Abstract | We leverage a temporary block of the Chinese microblogging platform Sina Weibo due to political events to estimate the causal effect of online word-of-mouth content on product demand in the context of TV show viewership. Based on this source of exogenous variation, we estimate an elasticity of TV show ratings (market share in terms of viewership) with respect to the number of relevant comments (comments were disabled during the block) of 0.016. We find that more postshow microblogging activity increases demand, whereas comments posted prior to the show airing do not affect viewership. These patterns are inconsistent with informative or persuasive effects and suggest complementarity between TV consumption and anticipated postshow microblogging activity. |
| Keywords | Microblogging, advertising, social media, word of mouth |
| URL | https://pubsonline.informs.org/doi/abs/10.1287/mksc.2017.1045?casa_token=lxxq5FpqeeYAAAAA:wXJbLLGEETzSUvKZeU-YY5LI26G3TkYo9IMD1j6sOlCDOgwPNrrscJ-3k5Nj5Cm9pe5mi7ArVvpq |
| Tags | Archival Empirical | Consumer Decisions | Media and Textual Analysis |
Sharing with friends versus strangers: How interpersonal closeness influences word-of-mouth valence
| Authors | Dubois, Bonezzi, Angelis |
| Journal | Journal of Marketing Research |
| Year | 2016 |
| Type | Published Paper |
| Abstract | How does interpersonal closeness (IC)--the perceived psychological proximity between a sender and a recipient--influence word-of-mouth (WOM) valence? The current research proposes that high levels of IC tend to increase the negativity of WOM shared, whereas low levels of IC tend to increase the positivity of WOM shared. The authors hypothesize that this effect is due to low versus high levels of IC triggering distinct psychological motives. Low IC activates the motive to self-enhance, and communicating positive information is typically more instrumental to this motive than communicating negative information. In contrast, high IC activates the motive to protect others, and communicating negative information is typically more instrumental to this motive than communicating positive information. Four experiments provide evidence for the basic effect and the underlying role of consumers' motives to self-enhance and protect others through mediation and moderation. The authors discuss implications for understanding how WOM spreads across strongly versus weakly tied social networks. |
| Keywords | Word of mouth, word-of-mouth valence, interpersonal closeness, self-enhancement, social media |
| URL | https://doi.org/10.1509/jmr.13.0312 |
| Tags | Consumer Decisions | Experimental / Survey-Based Empirical | Media and Textual Analysis | Social Network Structure |
Suspense and surprise
| Authors | Ely, Frankel, Kamenica |
| Journal | Journal of Political Economy |
| Year | 2015 |
| Type | Published Paper |
| Abstract | We model demand for noninstrumental information, drawing on the idea that people derive entertainment utility from suspense and surprise. A period has more suspense if the variance of the next period's beliefs is greater. A period has more surprise if the current belief is further from the last period's belief. Under these definitions, we analyze the optimal way to reveal information over time so as to maximize expected suspense or surprise experienced by a Bayesian audience. We apply our results to the design of mystery novels, political primaries, casinos, game shows, auctions, and sports. |
| URL | https://www.journals.uchicago.edu/doi/full/10.1086/677350 |
| Tags | Consumer Decisions | Financing- and Investment Decisions (Individual) | Investment Decisions (Institutional) | Manager / Firm Behavior | Social Transmission Biases | Theory |
News, politics, and negativity
| Authors | Soroka, McAdams |
| Journal | Political Communication |
| Year | 2015 |
| Type | Published Paper |
| Abstract | Work in political communication has discussed the ongoing predominance of negative news, but has offered few convincing accounts for this focus. A growing body of literature shows that humans regularly pay more attention to negative information than to positive information, however. This article argues that we should view the nature of news content in part as a consequence of this asymmetry bias observed in human behavior. A psychophysiological experiment capturing viewers' reactions to actual news content shows that negative news elicits stronger and more sustained reactions than does positive news. Results are discussed as they pertain to political behavior and communication, and to politics and political institutions more generally. |
| Keywords | Negativity bias, mass media, political communication, psychophysiology |
| URL | https://doi.org/10.1080/10584609.2014.881942 |
| Tags | Consumer Decisions | Experimental / Survey-Based Empirical | Media and Textual Analysis | Social Transmission Biases |
Word of mouth and interpersonal communication: A review and directions for future research
| Authors | Berger |
| Journal | Journal of Consumer Psychology |
| Year | 2014 |
| Type | Published Paper | Literature Review Paper |
| Abstract | People often share opinions and information with their social ties, and word of mouth has an important impact on consumer behavior. But what drives interpersonal communication and why do people talk about certain things rather than others? This article argues that word of mouth is goal driven and serves five key functions (i.e., impression management, emotion regulation, information acquisition, social bonding, and persuasion). Importantly, I suggest these motivations are predominantly self- (rather than other) serving and drive what people talk about even without their awareness. Further, these drivers make predictions about the types of news and information people are most likely to discuss. This article reviews the five proposed functions and well as how contextual factors (i.e., audience and communication channel) may moderate which functions play a larger role. Taken together, the paper provides insight into the psychological factors that shape word of mouth and outlines additional questions that deserve further study. |
| URL | https://doi.org/10.1016/j.jcps.2014.05.002 |
| Tags | Archival Empirical | Consumer Decisions | Experimental / Survey-Based Empirical | Media and Textual Analysis | Social Transmission Biases |
Temporal contiguity and negativity bias in the impact of online word of mouth
| Authors | Chen, Lurie |
| Journal | Journal of Marketing Research |
| Year | 2013 |
| Type | Published Paper |
| Abstract | Prior research shows that positive online reviews are less valued than negative reviews. The authors argue that this is due to differences in causal attributions for positive versus negative information such that positive reviews tend to be relatively more attributed to the reviewer (vs. product experience) than negative reviews. The presence of temporal contiguity cues, which indicate that review writing closely follows consumption, reduces the relative extent to which positive reviews are attributed to the reviewer and mitigates the negativity bias. An examination of 65,531 Yelp.com restaurant reviews shows that review value is negatively related to review valence but that this negative relationship is absent for reviews that contain temporal contiguity cues. A series of lab studies replicates these findings and suggests that temporal contiguity cues enhance the value of a positive review and increase the likelihood of choosing a product with a positive review by changing reader beliefs about the cause of the review. |
| Keywords | Word of mouth, negativity bias, temporal contiguity, causal attributions |
| URL | https://doi.org/10.1509/jmr.12.0063 |
| Tags | Archival Empirical | Consumer Decisions | Experimental / Survey-Based Empirical | Social Transmission Biases |
Digitizing doctor demand: The impact of online reviews on doctor choice
| Authors | Luca, Vats |
| Year | 2013 |
| Type | Working Paper |
| Abstract | We present empirical evidence for the impact of patient reviews on consumers' physician choices. Our study is based on ZocDoc.com - a unique website that integrates patient reviews, and appointment scheduling for physicians on one platform. Using ZocDoc we construct a novel data set consisting of all reviews written for primary care physicians in Manhattan, New York. We then pair these reviews with data on appointments that are booked through ZocDoc, during February-May, 2013. Our data suggest that patient reviews are becoming an important source of reputation for physicians. About 25% of New York primary care physicians are now listed on ZocDoc, and 84% of them have at least 5 reviews. Because ZocDoc displays each physician's rounded average rating to patients, we can use regression discontinuity to identify the causal impact of patient ratings on patient demand. We find that half a star improvement in ratings, on a scale of 1 to 5 stars, leads to a 10% increase in the likelihood, at the mean, that a doctor will fill an appointment. |
| URL | https://www.aeaweb.org/conference/2014/retrieve.php?pdfid=55.%20Accessed%205/23/18 |
| Tags | Archival Empirical | Consumer Decisions |
Learning from the crowd: Regression discontinuity estimates of the effects of an online review database
| Authors | Anderson, Magruder |
| Journal | Economic Journal |
| Year | 2012 |
| Type | Published Paper |
| Abstract | Internet review forums increasingly supplement expert opinion and social networks in informing consumers about product quality. However, limited empirical evidence links digital word-of-mouth to purchasing decisions. We implement a regression discontinuity design to estimate the effect of positive Yelp.com ratings on restaurant reservation availability. An extra half-star rating causes restaurants to sell out 19 percentage points (49%) more frequently, with larger impacts when alternate information is more scarce. These returns suggest that restaurateurs face incentives to leave fake reviews but a rich set of robustness checks confirm that restaurants do not manipulate ratings in a confounding, discontinuous manner. |
| Keywords | Sports events, media, Olympics, Olympic stocks, retail investors, valuation, fundamentals, comovement, categorization, investor sentiment, investor recognition, common factor, stay-at-home, meme |
| URL | https://doi.org/10.1111/j.1468-0297.2012.02512.x |
| Tags | Archival Empirical | Consumer Decisions | Manager / Firm Behavior | Media and Textual Analysis |
What makes online content viral?
| Authors | Berger, Milkman |
| Journal | Journal of Marketing Research |
| Year | 2012 |
| Type | Published Paper |
| Abstract | Why are certain pieces of online content (e.g., advertisements, videos, news articles) more viral than others? This article takes a psychological approach to understanding diffusion. Using a unique data set of all the New York Times articles published over a three-month period, the authors examine how emotion shapes virality. The results indicate that positive content is more viral than negative content, but the relationship between emotion and social transmission is more complex than valence alone. Virality is partially driven by physiological arousal. Content that evokes high-arousal positive (awe) or negative (anger or anxiety) emotions is more viral. Content that evokes low-arousal, or deactivating, emotions (e.g., sadness) is less viral. These results hold even when the authors control for how surprising, interesting, or practically useful content is (all of which are positively linked to virality), as well as external drivers of attention (e.g., how prominently content was featured). Experimental results further demonstrate the causal impact of specific emotion on transmission and illustrate that it is driven by the level of activation induced. Taken together, these findings shed light on why people share content and how to design more effective viral marketing campaigns. |
| Keywords | Word of mouth, viral marketing, social transmission, online content |
| URL | https://doi.org/10.1509/jmr.10.0353 |
| Tags | Archival Empirical | Consumer Decisions | Experimental / Survey-Based Empirical | Media and Textual Analysis | Social Transmission Biases |
How does the variance of product ratings matter?
| Authors | Sun |
| Journal | Management Science |
| Year | 2012 |
| Type | Published Paper |
| Abstract | This paper examines the informational role of product ratings. We build a theoretical model in which ratings can help consumers figure out how much they would enjoy the product. In our model, a high average rating indicates a high product quality, whereas a high variance of ratings is associated with a niche product, one that some consumers love and others hate. Based on its informational role, a higher variance would correspond to a higher subsequent demand if and only if the average rating is low. We find empirical evidence that is consistent with the theoretical predictions with book data from Amazon.com and BN.com. A higher standard deviation of ratings on Amazon improves a book's relative sales rank when the average rating is lower than 4.1 stars, which is true for 35% of all the books in our sample. |
| URL | https://www.jstor.org/stable/41432790 |
| Tags | Archival Empirical | Consumer Decisions |
Opinion leadership and social contagion in new product diffusion
| Authors | Iyengar, Bulte, Valente |
| Journal | Marketing Science |
| Year | 2011 |
| Type | Published Paper |
| Abstract | We study how opinion leadership and social contagion within social networks affect the adoption of a new product. In contrast to earlier studies, we find evidence of contagion operating over network ties, even after controlling for marketing effort and arbitrary systemwide changes. More importantly, we also find that the amount of contagion is moderated by both the recipients' perception of their opinion leadership and the sources' volume of product usage. The other key finding is that sociometric and self-reported measures of leadership are weakly correlated and associated with different kinds of adoption-related behaviors, which suggests that they probably capture different constructs. We discuss the implications of these novel findings for diffusion theory and research and for marketing practice. |
| Keywords | Superstition, insurance, rural household |
| URL | https://doi.org/10.1287/mksc.1100.0566 |
| Tags | Archival Empirical | Consumer Decisions | Social Network Structure |