Publication Type
Journal Article
Version
acceptedVersion
Publication Date
12-2013
Abstract
The long tail phenomenon has been attributed to both supply side and demand side economies. While the cause on the supply side is well-known, research on the demand side has largely focused on the awareness effect of online information that helps consumers discover new and often niche products. This study expands the demand side factors by showing that online information also influences the long tail phenomenon through the informative effect, which affects consumers' evaluation of product quality. We examine the informative effect in the context of online WOM. Two sets of theories suggest opposite directions for the implication of the informative effect. Information search and information cascade literatures indicate that WOM provides additional information to consumers, reduces the occurrence of information cascade, and encourages the formation of long tail. Studies on behavior heuristics, however, suggest that consumers tend to ignore online information inconsistent with their prior beliefs, which leads to a rich-gets-richer effect for popular products and curtail the formation of the long tail. We empirically examine the conflict by analyzing different impacts of online WOM across product popularity and WOM ratings. Using a panel data collected from Amazon.com, we show that positive reviews improve the sales of popular products more than the sales of niche products, while negative reviews hurt niche products more than popular products. The results are consistent with the prediction of the behavior heuristic and suggest that online WOM restrains the formation of long tail.
Keywords
Long tail, Word-of-mouth (WOM), Customer review, Information cascade
Discipline
Computer Sciences | E-Commerce | Numerical Analysis and Scientific Computing
Research Areas
Information Systems and Management
Publication
Decision Support Systems
Volume
56
First Page
474
Last Page
481
ISSN
0167-9236
Identifier
10.1016/j.dss.2012.11.004
Publisher
Elsevier
Citation
GU, Bin; TANG, Qian; and WHINSTON, Andrew B..
The influence of online word-of-mouth on long tail formation. (2013). Decision Support Systems. 56, 474-481.
Available at: https://ink.library.smu.edu.sg/sis_research/1840
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://doi.org/10.1016/j.dss.2012.11.004