We use detailed clickstream data on online word-of-mouth (WOM) to uncover mechanisms underlying its influence on consumer decision making. A feature launch on a major doctor appointment booking platform allows us to examine the effects of online WOM on three dimensions of a consumer’s choice process: the consideration set size, the time taken to consider alternatives (web session duration), and the geographic dispersion of the choices considered. Results indicate that the effects of WOM on decision-making processes are not monotonic but rather are contingent on the abundance of WOM (number of rated doctors) in a market. When the abundance of WOM is high, the introduction of WOM makes patients consider fewer doctors, browse for a shorter duration, and focus on doctors that are geographically more proximate. In contrast, when the abundance of WOM is low, the introduction of WOM makes patients consider more doctors, browse for longer duration, and consider doctors that are geographically more dispersed. We also find that WOM can lead to a cannibalization effect: when ratings are published, the highly rated doctors reap the benefits (in the form of increased demand) at the expense of unrated doctors. Our study contributes to the extant literature on online WOM by providing new insights into how WOM influences consumer decision making and by examining this question at a more granular level than prior work. This paper was accepted by Anandhi Bharadwaj, information systems.
How Digital Nudges Affect Consideration Set Size and Perceived Cognitive Effort in Idea Convergence of Open Innovation Contests
