'Herd Effects' Affect Online Ratings, Rendering Them Useless

Pablo Valerio, International Business & IT Consultant | 8/21/2013 | 39 comments

Pablo Valerio
A new study by researchers from the MIT Sloan School of Management, the Hebrew University of Jerusalem, and NYU Stern School of Business shows that many people like or give positive feedback just because others do. "This herding behavior happens systematically on positive signals of quality and ratings," says Sinan Aral, an associate professor at the MIT Sloan School of Management. While this phenomenon of social positivity sounds pleasant enough on the surface, there are pitfalls to it, such as the manipulation of online ratings by some political operatives, marketers, or anyone who stands to profit by creating an exaggerated appearance of popularity.

“Whereas negative social influence inspired users to correct manipulated ratings, positive social influence increased the likelihood of positive ratings by 32 percent and created accumulating positive herding that increased final ratings by 25 percent on average.”

The analysis reveals that the relative impact of this effect via Facebook is larger than observational learning, probably because people tend to trust their Facebook friends and are thus more likely to adopt the products endorsed by their friends.

In reality this is basic human behavior. We can look at the way the stock market works and find the group effect on a daily basis. On the one hand, group decision-making can lead to better decisions, but it can also lead to negative effects that have resulted in financial disasters.

In 1988 Jerry Harvey, a professor at George Washington University called it the “Abilene paradox.” Like all paradoxes, the Abilene paradox deals with absurdity. On the surface, it makes little sense for people, whether they are couples or friends, to take actions that are diametrically opposed to the way they rationally think.

The Abilene paradox is responsible for the herding effect on social networks. It makes people feel that, if one of their friends likes a particular product or service, it must be good. In essence, scientists confirm that the notion that a slight positive nudge can greatly impact the overall impact and influence of a link or comment.

Just look at the way Facebook advertises your friends’ likes so you check them and like those pages too. This creates a significant number of additional likes for pages that people don’t care about. They are just following their friends' recommendations. After a couple of levels of people liking a page because a friend of a friend did it in the first place, the fact that someone likes that page is completely meaningless.

Social networks are aware of this situation but prefer to ignore it, since its existence serves their interests. Companies such as Facebook, LinkedIn, and Instagram make billions on advertising to people who like pages, and the more likes a page or product has means incremental revenue.

The analysis reveals that the relative impact of this effect via Facebook is larger than observational learning, probably because people tend to trust their Facebook friends and thus are more likely to adopt the products endorsed by their friends. Smart CIOs will help their CMOs take advantage of this phenomenon, but they should also help CIOs correct for it when it comes to data analysis. Using social media as a focus group makes it easy to believe your own hype. Don't get caught in the trap social media hopes you fall into.

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Susan Nunziata   'Herd Effects' Affect Online Ratings, Rendering Them Useless   8/30/2013 4:13:16 AM
Re: impact
RashmiK: You're right. This is how sites such as Yelp and TripAdvisor work and I find their reviews to be much more useful in my decision-making. Angie's List, which is only avaialble to paying customers and accepts no advertising, is also a very useful resource for truly objecive reviews about businesses and individual service providers.

The herd effect isn't necessarily new, what's new is how easy social media sites make it for us to "like" the same things as our friends. While I pay attention to my FB friends when they "like" a certain recording artist, song, TV show or film, I tend to ignore the ones who "like" a brand or a retailer.

I've discovered some really great music this way.

 
kstaron   'Herd Effects' Affect Online Ratings, Rendering Them Useless   8/29/2013 11:09:49 AM
interesting behavioral effect
Interesting behavioral effect. And I can see where it comes from. If i've got a friend that swears by something i might try it out even if I thought it wouldn't before. This could easily get out of control when all you have to do is click a button. I think I prefer the star ratings with comments so I can see why they say they rated a product a certain way. I check a couple comments in each rating category for one start to five stars to get an overview of the pros and cons of a product.
The_Phil   'Herd Effects' Affect Online Ratings, Rendering Them Useless   8/27/2013 9:04:33 PM
Re: Skewed
Exactly the reason why I think ONLY 2 or 3 choices gets right to the point.
Nomi   'Herd Effects' Affect Online Ratings, Rendering Them Useless   8/27/2013 2:36:41 AM
Re: Re : 'Herd Effects' Affect Online Ratings, Rendering Them Useless
@Anand I have seen many a times two types of ratings, one is user ratings and other is editors ratings. I am not sure which one to follow.
Hayder   'Herd Effects' Affect Online Ratings, Rendering Them Useless   8/27/2013 2:33:38 AM
Re: Skewed
Zaius you are right about the ratings. Many a times I have heard people are paid for these kind of jobs by the companys to write the reviews and give them rating so people who go with reviews and rating only will be fooled :)
Joe Stanganelli   'Herd Effects' Affect Online Ratings, Rendering Them Useless   8/27/2013 12:15:56 AM
Re: Skewed
Precisely...but "middle ground" responses are not actionable information, and thus not helpful to the survey takers.  Thus, the need to eliminate them.
The_Phil   'Herd Effects' Affect Online Ratings, Rendering Them Useless   8/26/2013 8:04:35 PM
Re: Skewed
Hmmm I don't know about that but I'm pretty sure if you asked enough people, most still usually stick with the "middle ground" when it comes to surveys
The_Phil   'Herd Effects' Affect Online Ratings, Rendering Them Useless   8/26/2013 8:02:12 PM
Re: Skewed
I get it but still too much to have to leave to subjectivity when your product counts on the feedback.
The_Phil   'Herd Effects' Affect Online Ratings, Rendering Them Useless   8/26/2013 8:00:41 PM
Re: Skewed
My point exactly. Which is why I think a 1-2 or 3 point star scale should be used max for ratings. This way, it's almost perfectly clear what you think.
RashmiK   'Herd Effects' Affect Online Ratings, Rendering Them Useless   8/25/2013 1:40:57 AM
Re: Impact
That's quite true; I have followed many pages on the social media just because a friend has recommended that particular page and even rank a site highly because many of the people who had visited did the same even though I never got anything meaningful from the site. The herding opinion is a real issue and many companies are reaping a fortune from it.
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