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The purpose of this paper is to review recent contributions to the theoretical and empirical literature on informational cascades.
Abstract
Purpose
The purpose of this paper is to review recent contributions to the theoretical and empirical literature on informational cascades.
Design/methodology/approach
This paper reviews and synthesises the existing literature, methodologies and evidence on informational cascades.
Findings
Many financial settings foster situations where informational cascades and herding are likely. Cascades remain mainly an area of experimental research, leaving the empirical evidence inconclusive. Existing measures have limitations that do not allow for a direct test of cascading behaviour. More accurate models and methods for empirical testing of informational cascades could provide more conclusive evidence on the matter.
Practical implications
Outlined findings have implications for designing policies and regulatory requirements, as well as for the design of collective decisions processes.
Originality/value
The paper reviews and critiques existing theory; it summarises the recent laboratory and empirical evidence and identifies issues for future research. Most of other theoretical work reviews informational cascades as a subsection of herding. This paper focusses on informational cascades specifically. It distinguishes between informational cascade and herding. The paper also reviews most recent empirical evidence on cascades, presents review and synthesis of the theoretical and empirical development on information cascades up to date, and reviews the model of informational cascades with model criticism.
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Qihua Liu and Liyi Zhang
The purpose of this paper is to examine information cascades in the context of users’ e-book reading behavior and differentiate it from alternative factors that lead to herd…
Abstract
Purpose
The purpose of this paper is to examine information cascades in the context of users’ e-book reading behavior and differentiate it from alternative factors that lead to herd behavior, such as network externalities and word-of-mouth effects.
Design/methodology/approach
This paper constructed panel data using information concerning 226 e-books in 30 consecutive days from Sina.com’s reading channel (Book.Sina.com.cn) from October 2, 2013, to October 31, 2013 of the same year in China. A multinomial logit market-share model was employed.
Findings
E-books’ ranking has a significant impact on their market share, as predicted by informational cascades theory. Higher ranking e-books’ clicks will see a greater increase as a result of an increase in clicks ranking. Due to the information cascades effect, review volume had no impact on the market share of popular e-books. Total votes had a powerful impact on the market share of e-books, showing that once information cascade occurred, it could be enhanced by the increase in total votes. The total clicks of e-books had a significant impact on their market share, suggesting that online reading behavior would be influenced by network externalities.
Practical implications
As important information, the ranking or popularity of e-books should be carefully considered by online reading web sites, publishers, and authors. It is not enough for the authors and publishers of e-books to simply pay attention to the content. They should design their marketing strategies to allow network externalities and informational cascades to work for them, not against them. Online reading web sites should also focus on eliminating certain behavior, such as “brush clicks” and “brush votes,” in order to prevent an undesirable information cascade due to false information.
Originality/value
To the best of the knowledge, this is the first study to examine information cascades in the context of users’ e-book reading behavior. Moreover, this study can help other researchers by utilizing a large sample of daily data from one of the earliest online reading platforms in China.
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Joohyun Kim, Ohsung Kwon and Duk Hee Lee
The purpose of this paper is to explore how hubs’ social influence on social network decisions can cause the behavior of information cascades in a market.
Abstract
Purpose
The purpose of this paper is to explore how hubs’ social influence on social network decisions can cause the behavior of information cascades in a market.
Design/methodology/approach
The authors establish understanding of the fundamental mechanism of information cascades through a computational simulation approach.
Findings
Eigenvector centrality, betweenness centrality, and PageRank are statistically correlated with the occurrence of information cascades among agents; the hubs’ incorrect decisions in the early diffusion stage can significantly cause misled shift cascades; and the bridge role of hubs is more influential than their pivotal position role in the process of misled shift cascades.
Originality/value
This implication can be extendable in the field of marketing, sequential voting, and technology, or innovation adoption.
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JiHye Park, JaeHong Park and Ho-Jung Yoon
When purchasing digital content (DC), consumers are typically influenced by various information sources on the website. Prior research has mostly focused on the individual effect…
Abstract
Purpose
When purchasing digital content (DC), consumers are typically influenced by various information sources on the website. Prior research has mostly focused on the individual effect of the information sources on the DC choice. To fill the gap in the previous studies, this research includes three main effects: information cascades, recommendations and word of mouth. In particular, the purpose of this paper is to focus on the interaction effect of information cascades and recommendations on the number of software downloads.
Design/methodology/approach
The authors use the panel generalized least squares estimation to test the hypotheses by using a panel data set of 2,000 pieces of software at download.cnet.com over a month-long period. Product ranking and recommendation status are used as key independent variables to capture the effects of information cascades and recommendations, respectively.
Findings
One of this study’s findings is that information cascades positively interact with recommendations to influence the number of software downloads. The authors also show that the impact of information cascades on the number of software downloads is greater than one of the recommendations from a distributor does.
Originality/value
Information cascades and recommendations have been considered as the primary effects for online product choices. However, these two effects typically are not considered together in one research. As previous studies have mainly focused on each effect, respectively, the authors believe that this study may fill the gap by examining how these effects are interacted to one other to influence customers’ choices. The authors also show that the impact of information cascades on the number of software downloads is greater than one of the recommendations from a system does.
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Tyler Hancock, Michael Breazeale, Frank G. Adams and Haley Hardman
A firestorm is a vast wave of negative information about a brand that disseminates quickly online. Their relative unpredictability represents a particularly challenging problem…
Abstract
Purpose
A firestorm is a vast wave of negative information about a brand that disseminates quickly online. Their relative unpredictability represents a particularly challenging problem for brand marketers. This paper aims to show how firestorms are enabled and can be disabled by online community members (OCMs), exploring the dissemination of negative electronic word-of-mouth (e-WOM), the challenges in countering negative brand information and how brands can effectively communicate with OCMs to facilitate offsetting negative e-WOM.
Design/methodology/approach
This paper uses a sequential mixed-method research methodology. Study 1 uses an experimental design and tests serial mediation using PROCESS Model 6. Study 2 extends the findings while introducing a moderator using the PROCESS Model 83. Finally, qualitative findings are used to develop a practitioner-friendly typology of OCMs.
Findings
The perceived authenticity of a message can influence the believability of negative WOM in the presence of a negative availability cascade. Positive cascades are likely to prevent online communities from enabling negative e-WOM when the instigating message is perceived to be inauthentic. Qualitative findings from a post hoc analysis identify a typology of eight OCM types that enable and are also capable of disabling firestorms.
Practical implications
OCMs can both actively fuel and cool a firestorm. Brands should always monitor online communities and closely monitor discussions that are most likely to generate firestorms. More proactively, they should also develop communication strategies for each OCM type to help disable firestorms in the making.
Originality/value
Both negative and positive cascades are explored quantitatively and qualitatively to understand the mechanisms that can drive firestorms and provide both warnings and guidance for brands. An OCM typology guides brands’ mitigation strategies.
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Huasi Xu, Yidi Liu, Bingqing Song, Xueyan Yin and Xin Li
Drawing on social network and information diffusion theories, the authors study the impact of the structural characteristics of a seller’s local social network on her promotion…
Abstract
Purpose
Drawing on social network and information diffusion theories, the authors study the impact of the structural characteristics of a seller’s local social network on her promotion effectiveness in social commerce.
Design/methodology/approach
The authors define a local social network as one formed by a focal seller, her directly connected users and all links among these users. Using data from a large social commerce website in China, the authors build econometric models to investigate how the density, grouping and centralization of local social networks affect the number of likes received by products posted by sellers.
Findings
Local social networks with low density, grouping and centralization are associated with more likes on sellers’ posted products. The negative effects of grouping and centralization are reduced when density is high.
Originality/value
The paper deepens the understanding of the determinants of social commerce success from a network structure perspective. In particular, it draws attention to the role of sellers’ local social networks, forming a foundation for future research on social commerce.
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Julia Duggleby, David Jennings, Fred Pickering, Seb Schmoller, Femi Bola, Richard Stone and Penny Willis
Addresses three separate initiatives: South Yorkshire Further Education Consortium (SYFEC); e‐skills4industry – a partnership between Lewisham College and Deloitte; and Cascade…
Abstract
Addresses three separate initiatives: South Yorkshire Further Education Consortium (SYFEC); e‐skills4industry – a partnership between Lewisham College and Deloitte; and Cascade and information and communication technology (ICT) training for schools. The initiatives, however, share two important characteristics. First, they are all initiatives which have been recognised within the National Training Awards (NTA) programme organised by UK Skills and supported by the UK Government's Department for Education and Skills (DfES). Second, each of the initiatives, albeit in different ways, looks at the utilisation of information and communication technology (ICT) in different aspects of education and training. The three winning accounts featured here offer useful insight into how the further and higher education sectors, in partnership with industry, are responding to some of the challenges and opportunities that have arisen as the use of information technology (IT) becomes common place in people's working (and learning) lives.
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Presents a case study concerning the attempts of a particular group of managers to implement an “empowered” system of working within their organization. Rejecting managerialist…
Abstract
Presents a case study concerning the attempts of a particular group of managers to implement an “empowered” system of working within their organization. Rejecting managerialist accounts of empowerment as distorted representations of social processes and social action, the paper investigates the “4Cs” of empowerment: context, construction, cascade and contest, within the processes of empowerment in an attempt to encourage a more reflective approach.
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