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samedi 14 septembre 2013

E-WOM and Social Influence: Beware of on-line comments

The impact of electronic word-of-mouth (e-WOM) is huge. We know that. A recent article published in Science by Lev Muchnik, Sinan Aral and Sean Taylor confirms that our opinions are largely influenced by on-line comments. This also raises the issue of fake reviews.

A randomized experiment with more than 300,000 ratings over five months.

Key results
Prior ratings from others (here 'write comments in response to posted articles') create significant bias in its own individual rating behavior. More specifically:
  • If the first comment was positive, this comment significantly increases the immediate likelihood of positive ratings by 32%, and leads to a 25% increase in the mean rating over the five months.
  • If the first comment was negative, there was a higher probability that subsequent comments would be negative, relative to the control.  However, over the five months, this was offset by a larger “correction effect” so that the negative effect was neutralized.
Managerial implications
"Because the negative feedback doesn’t  snowball, but the positive feedback does,  increased turnout for providing UGC or ratings only seems to help  on net. So yes, soliciting feedback would prove to be on average universally good for these companies"

Ethical implications
“For businesses there is clearly an incentive to manipulate the ratings,  especially early on. Because you get this 25% increase in the mean rating of the item with a single positive up vote of the item. And that is a big marginal change in a final score from a single action at the beginning.”

dimanche 28 avril 2013

Do you know the emotional oracle effect ?


"Will it rain tomorrow? Who will win American Idol? How high will the Dow Jones be next week? Who will be our next president?"

A recent american research from Pham, Lee & Stephen shows some surprising results. If you have some basic knowledge in a field, plus a high confidence in your own feelings, you will be able to predict better than others in this area.


"Eight studies reveal an intriguing phenomenon: individuals who have higher trust in their feelings can predict the outcomes of future events better than individuals with lower trust in their feelings. This emotional oracle effect was found across a variety of prediction domains, including (a) the 2008 US Democratic presidential nomination, (b) movie box-office success, (c ) the winner of American Idol, (d) the stock market, (e) college football, and even (f ) the weather. (see table below)

Why and how it works ?

"It is mostly high trust in feelings that improves prediction accuracy rather than low trust in feelings that impairs it. However, the effect occurs only among individuals who possess sufficient background knowledge about the prediction domain, and it dissipates when the prediction criterion becomes inherently unpredictable. The authors hypothesize that the effect arises because trusting one’s feelings encourages access to a “privileged window” into the vast amount of predictive information that people learn, often unconsciously, about their environments."

Michel Tuan Pham, Leonard Lee, and Andrew T. Stephen (2012), "Feeling the Future: The Emotional Oracle Effect", Journal of Consumer Research, Vol. 39, No. 3, pp. 461-477.

For more results and full pdf