Do I Follow My Friends or the Crowd? Information Cascades in Online Movie Ratings

TLDR

Online product ratings are widely available and influence prospective buyers, and recent research examines how prior ratings shape new ratings. This study investigates how prior ratings from strangers (the crowd) versus friends differentially influence users’ ratings. The authors find that crowd ratings exhibit both herding and differentiation depending on movie popularity, that friends always induce herding, that social networking reduces crowd herding, and that a larger friend audience increases ratings, raising concerns about rating reliability and the need for debiasing methods. The paper was accepted by Sandra Slaughter, Information Systems.

Abstract

Online product ratings are widely available on the Internet and are known to influence prospective buyers. An emerging literature has started to look at how ratings are generated and, in particular, how they are influenced by prior ratings. We study the social influence of prior ratings and, in particular, investigate any differential impact of prior ratings by strangers (“crowd”) versus friends. We find evidence of both herding and differentiation behavior in crowd ratings wherein users’ ratings are influenced positively or negatively by prior ratings depending on movie popularity. In contrast, friends’ ratings always induce herding. Further, the presence of social networking reduces the likelihood of herding on prior ratings by the crowd. Finally, we find that an increase in the number of friends who can potentially observe a user’s rating (“audience size”) has a positive impact on ratings. These findings raise questions about the reliability of ratings as unbiased indicators of quality and advocate the need for techniques to debias rating systems. This paper was accepted by Sandra Slaughter, information systems.