How to Influence My Customers? The Impact of Electronic Market Design
This paper investigates the strategic decisions of online vendors for offering different mechanism, such as sampling and online reviews of information products, to increase their online sales. Focusing on measuring the effectiveness of electronic market design (offering reviews, sampling, or both), our study shows that online markets behavior as communication markets, and consumers learn product quality information both passively (reading online reviews) and actively but subjectively (listening to music sampling). Using data from Amazon, first we show that sampling along is a strong product quality signal that reduces the product uncertainty after controlling for halo effect. In general, products with sampling option enjoy a higher conversion rate (which leads to better sales) than those without sampling because sampling decreases the uncertainty of consuming experience goods. Second, the impact of online reviews on sales conversion rate is lower for experience goods with a sampling option than those without. Third, when the uncertainty of the societal reviews is higher, sampling plays a more important role because it mitigates such uncertainty introduced by online reviews.
Electronic Market Design Conversion Rate Halo Effect Online Product Reviews Sampling
Nan Hu Bin Chen Jialie Shen Ling Liu
Singapore Management University Singapore, 178902 University of Texas at Dallas Richardson, Texas
国际会议
第十七届国际万维网大会(the 17th International World Wide Web Conference)(WWW08)
北京
英文
2008-04-21（万方平台首次上网日期，不代表论文的发表时间）