Online Peer and Editorial Recommendations, Trust, and Choice in Virtual Markets

ONLINE PEER AND EDITORIAL RECOMMENDATIONS, TRUST, AND CHOICE IN VIRTUAL MARKETS
DONNAVIEVE SMITH, SATYA MENON, AND K. SIVAKUMAR
his research examines the influence of recommendations on consumer
DONNAVIEVE SMITH
is an Assistant Professor at North Central College, Naperville, IL.
decision making during online shopping experiences. Evidence from two empirical studies suggests that many online consumers seek and accept recommendations in order to effectively manage the amount of information available during online search processes. These findings suggest that consumers use the mere availability of peer recommendations as a decisionmaking heuristic, irrespective of the peer recommenders personal characteristics. Findings also suggest that consumer preference for peer versus editorial recommendations depends on the specific nature of the consumers shop-
SATYA MENON
is Vice President (Marketing Science) at Millward Brown, Naperville, IL.
ping goal: utilitarian or hedonic. Finally, results from this study indicate that consumers prefer peer and editorial recommendations over other types of effort-reducing cues that might be available during online search. As such, retailers must consider a number of factors including recommender characteristics, shopping goals, and product characteristics in their bid to provide consumers with the appropriate type of recommendation for their respective decision-making task.
K. SIVAKUMAR
is the Arthur Tauck Professor of International Marketing and Logistics and Professor of Marketing at Lehigh
2005 Wiley Periodicals, Inc. and Direct Marketing Educational Foundation, Inc. JOURNAL OF INTERACTIVE MARKETING VOLUME 19 / NUMBER 3 / SUMMER 2005 Published online in Wiley InterScience (www.interscience.wiley.com). DOI: 10.1002/dir.20041
University, Bethlehem, PA; e-mail: k.sivakumar@lehigh.edu
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INTRODUCTION
Despite the explosive growth of electronic commerce and the rapidly increasing number of consumers who use interactive media (such as the World Wide Web) for information search and shopping, very little is known about how consumers make purchase decisions in such settings (Hubl & Trifts, 2000). In general, consumers may often feel uneasy about their inability to physically handle online merchandise, the lack of customer service, and/or the fact that they have to disclose private information (Van den Poel & Leunis, 1999). But even more overwhelming to consumers may be the abundance of choice alternatives and product information that become available to them within online settings (Firat, Madnick, & Siegel, 2000; Huang, 2000; Kwak, 2001). The Internets advantage of providing more choices more easily can overwhelm online shoppers who have to contend with a limited cognitive capacity to process the abundant information (Hubl & Murray, 2003; Kahneman & Tversky, 1993; Tversky & Kahneman, 1974). Several studies of traditional and online shopping environments have documented many indicators of choice difficulty when confronted with too many choices, such as deferring the decision to buy, making suboptimal decisions, or feeling unhappy with their choices (Brynjolfsson & Smith, 2000; Hubl & Trifts, 2000; Iyengar & Lepper, 2000; Schwartz, et al., 2002). As cognitive misers, consumers generally do not enjoy expending effort on decision-making (Payne, Bettman, & Johnson, 1993), and researchers have found a negative relationship between the amount of effort individuals exert and their overall satisfaction with the decision process (Bechwati & Xia, 2003). Further, online consumers are known to actively search for cues such as decision aids and comparison agents that might assist them in the preservation of their cognitive resources (Jacso, 1998; Todd & Benbasat, 1992, 1999). E-tail organizations have responded to the consumer need to reduce the amount of effort they exert during the decision-making process by offering several decision aids (Armstrong & Hagel, 1996; Swaminathan, 2003). Popular among such decision aids are product recommendations that can be obtained from electronic agents, customer service employees, and other online peer consumers. These product recommendations can be particularly influential in building trust in specific
products (Gershoff, Mukherjee, & Mukhopadhyay, 2003; Hubl & Murray, 2003), as well as building consumer comfort with the entire online shopping process (Dayal, Landesberg, & Zeisser, 1999). While there has been a growing interest in researching the influence of online recommendation agents, the primary focus has been on electronic recommendation agents rather than peer consumers as recommenders (Gershoff, Mukherjee, & Mukhopadhyay, 2003; Hubl & Murray, 2003; Hubl & Trifts, 2000; Swaminathan, 2003). Despite the fact that consumers may consider peers to be more credible and useful sources of information than electronic agents, the flow of product-related communication from consumer to consumer remains a much less researched aspect of e-commerce. The success of Internet sites such as Epinions.com, BizRate.com, Planetfeedback.com, and Ecomplaints. com, where consumers share product reviews and consumption experiences, suggests that communication between consumers may exert significant influence on product search and purchase choice. E-tailers such as Amazon.com, eBay, and Wine.com encourage consumers to write reviews about products sold on their Web sites and to share these reviews with other consumers, perhaps recognizing that peer recommendations can be a powerful promotional tool. For peer recommendations to be effective as decision-making aids, the consumer must trust the recommender. Online retailers such as eBay have attempted to address the issue of trust and credibility of recommendation agents by offering rating systems in which consumers provide feedback about the quality of information provided by the recommender in the past. Other retailers (e.g., Epinions.com) take a more personal approach, posting a short biographical sketch of the peer reviewer that describes the persons background and interests. This practice suggests that reviewer profiles may provide relevant information to consumers in deciding whether to accept peer advice. Information in such reviewer profiles may be especially important in online environments where, lacking credible, meaningful relationships with one another, consumers may rely on information cues in profiles to develop trust and form affective bonds with peers. In spite of the extensive exchange of information that occurs between consumers in online environments, there is a lack of research investigating the impact of
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JOURNAL OF INTERACTIVE MARKETING
such exchanges. Extant research has examined the influence of interpersonal communication primarily in face-to-face settings. Generally, researchers have explored the factors that facilitate recommender selection (Duhan, Johnson, Wilcox, & Harrell, 1997; Gilly, Graham, Wolfinbarger, & Yale, 1998), the relationship between the specific task and source selection (Gershoff, Broniarczyk, & West, 2001), and the type of information that people prefer to attain when seeking recommendations (Rosen & Olshavsky, 1987). While these studies have broadened our knowledge of how individuals select sources when seeking specific product information, they have not explored whether and how consumers utilize recommendations during the decision-making process. To alleviate this important gap in the literature, our research investigates the relevance of peer recommendations as one type of decision aid available within online environments. We focus on peer characteristics that can facilitate the formation of trust within online decision-making and examine how specific shopping objectives may moderate the influence of these characteristics on trust and the influence of the recommender during product choice. We propose that when shopping goals are primarily utilitarian in nature, consumers will rely on peer recommenders level of expertise as a cue to judge trustworthiness. Conversely, when shopping objectives are primarily hedonic in nature, consumers will rely on the level of perceived rapport or closeness shared with recommenders to judge their trustworthiness. To our knowledge, no prior research has examined the impact of providing peer recommendations on actual product choice or on information search during choice. Accordingly, in our research, we specifically examine how the provision of peer recommendation impacts consumers overall decision-making strategy by comparing search processes and choices when a recommendation is offered to those when recommendation is not available. Further, we examine consumers preferences for peer recommendations relative to other suggestive, effort-reducing cues that may be available to them in the decision-making environment, such as editorial recommendations and sponsored advertisements. We suggest that, depending on their particular shopping goals, consumers are likely to choose either peer or editorial recommendations as decision aids during product search and choice.
CONCEPTUAL FRAMEWORK AND HYPOTHESES

Background Research on the Role of Peer Recommenders
Although researchers have not examined the distinct nature of online environments in relation to peer-topeer communication, we know that electronic marketplaces present consumers with disparate conditions. The information-intensive, intangible, and impersonal characteristics of online environments create considerable uncertainty as consumers try to make purchase decisions (Hubl & Trifts, 2000). Past research suggests that consumer preferences in such contexts are easily influenced by information cues that are made salient at the time of decision-making. For example, attributes primed via Web site background (Mandel & Johnson, 2002), attributes included in the recommendation of an electronic agent (Hubl & Murray, 2003), and the perceived cost of processing information (Lynch & Ariely, 2000) have been found to affect consumer decisions. We propose that a peer recommendation is one such information cue that will significantly influence consumer search process and choice decision. The literature on consumer decision-making characterizes consumers as adaptive decision makers because they adapt their decision-making strategies to specific environments and tasks (Payne et al., 1993). Past research also suggests that in informationintensive environments, consumers may seek others opinions as a means of managing the perceived risks typically associated with cognitively demanding tasks (Dowling & Staelin, 1994). Often, information provided by others is the only or predominant source of prepurchase information used by consumers (Beatty & Smith, 1987; Olshavsky & Granbois, 1979). Indeed, past research suggests that consumers may prefer to rely on word-of-mouth information rather than information about product attributes (Herr, Kardes, & Kim, 1991). This may be because word-of-mouth information, as compared to marketer-provided attribute information or advertisements, is more vivid (Herr et al., 1991), easier to use, or perceived as more trustworthy because it is based on others experiences (Smith, 1993). Therefore, the literature strongly supports the influence of peer recommenders in e-commerce settings. The present research builds
ONLINE PEER AND EDITORIAL RECOMMENDATIONS, TRUST, AND CHOICE
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H9
Recommendation Source
Shopping Goals Hedonic vs. Utilitarian

H6 H3 H1 H5
Decision-Making Process
Peer Recommendation
Expertise Rapport
H2 H4
Trust in the Peer Recommender

H7
Perceived Influence of Recommender
Editorial Recommendation
Shopping Goals Hedonic vs. Utilitarian

H8
Product Choice
FIGURE 1
Conceptual Model of Online Recommendation-Based Decision Making
upon this linkage and explores the role of recommender characteristics and shopping goals.
Development of Hypotheses
Trust in the Peer Recommender. The importance of online trust has gone up over the recent past as customers now have more options and information on the Web, making it critical for firms to earn and retain the trust of their current or potential customers (Shankar, Sultan, & Urban 2002, p. 2). Described as the willingness of a party to be vulnerable to the actions of another (Mayer, Davis, & Schoorman, 1995), trust is an important antecedent of behaviors that demonstrate dependence on others, such as accepting others advice (McKnight, Choudhury, & Kacmar, 2002). Researchers have suggested that in the early stages of computer use, trust may be related more to a consumers perception of the technology itself. However, the building and sustaining of long term trust is more complicated and based in part on the experiences that consumers have within virtual environments. Online trust may be significantly influenced by the quantity and quality of information garnered during online experiences (Shankar, Sultan, & Urban, 2002; Urban, Sultan, & Qualls, 2000). Given the unique challenges of online environments, consumers generally associate a greater level of risk with online shopping experiences than with traditional retail settings. It has been suggested that trust in a Web vendor helps consumers overcome perceptions of
Conceptual Model
Our conceptual framework is presented in Figure 1. We propose that the heightened risk perceptions associated with online activities provide the foundation upon which trust develops during online peer-to-peer communications. We not only seek to examine recommender characteristics that affect trust and, in turn, the perceived influence of the recommender, but to uncover the direct relationship between recommendation availability and actual choice preferences. While a consumer may be motivated to adopt a peer-recommended product due to a desire to reduce the amount of effort they exert during the decision-making process, a consumers subjective feeling of being influenced by the recommender may depend on whether s/he trusts the recommender, which in turn may depend on specific recommender characteristics. Thus, we investigate how trust in the peer recommender impacts consumer perceptions of an online peer recommender and the advice s/he provides. We also explore how utilitarian and/or hedonic purchasing objectives moderate the relationship between recommender characteristics and the perceived influence of the recommender.
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risk and insecurity during online shopping experiences. Online trust may also allow consumers to share personal information and to act on Web-vendor advice (McKnight et al., 2002). Most importantly, online trust may affect consumers willingness to make a purchase (Bart, Shankar, Urban, & Sultan, 2004). Therefore, we conceptualize trust in the peer recommender as the central construct that mediates the perceived influence of a peer recommender on the consumers product choice decision. We propose that the heightened risk perceptions associated with online experiences, combined with the decision uncertainty that results from numerous choice alternatives, provides consumers with the basic motivation to develop trust in a peer recommender within an online environment. H1: The greater the trust in the peer recommender, the greater the perceived influence of the peer recommender on the choice decision. Credibility (belief in the agents expertise) and benevolence (the agents concern about the consumers best interest) have been proposed as the underlying dimensions of trust (Bart et al., 2004; Ganesan, 1994). Researchers have offered several possible antecedents and consequences of online trust (Shankar et al., 2002). Some of the antecedents have included the sellers reputation, amount of experience with the seller, and the incidence of opportunistic behavior while the consequences have included the creation of long-term relationships between a buyer and seller. Other researchers have offered that consumer trust in an agent (seller) may be influenced in part by the level of risk present in the environment, the agents ability to be persuasive, and communication outcomes (Bart et al., 2004; Geyskens, Steenkamp, & Kumar 1999). As consumers rely on Web vendors and employees to provide accurate information during online transactions, an information agents credibility or expertise could serve to influence the level of trust that is placed in the agent and the type of behavior that is manifested during online transactions. In addition to the competence or domain expertise, the literature on interpersonal influence and persuasion suggests perceived rapport or similarity between a consumer and an information agent with respect to demographics, tastes, and lifestyles (Duhan et al., 1997; Feick & Higie, 1992; Gilly et al., 1998) may also influence the amount of trust that is placed in an information agent. We define these
constructs and examine their relevance with respect to online peer recommendations. Recommender Expertise. Researchers have examined recommender expertise, a dimension of trust, by considering ability (Sitkin & Roth, 1993) in terms of the skills and characteristics that enable a recommender to have influence within a particular area (Mayer, Davis, & Schoorman, 1995). The existence of professional critics and reviewers (ranging from institutional entities such as Consumer Reports to individuals such as film critics Roger Ebert and Richard Roeper) speaks to the importance of perceived expertise in those who provide advice and recommendations (West & Broniarczyk, 1998). Generally, those receiving information from critics and opinion leaders associate the correctness of the information with their perceptions of an individuals expertise in that particular domain (Feick & Higie, 1992). Because consumers often associate a greater level of risk with online shopping than with traditional retail stores, they actively seek cues in order to develop trusting attitudes during their online experiences. Numerous researchers have made the distinct association between an endorsers level of expertise and perceived trustworthiness as well as with the perceived influence of the endorser (Feick & Higie, 1992; Gilly et al., 1998; McCracken, 1989; McGinnies & Ward, 1980). Therefore, we propose that a consumers perceptions of a peer recommenders expertise could serve as a cue that influences the level of trust that the consumer places in a particular recommender. Thus, consumers may rely on overall perceptions of the recommenders ability and skills in relation to a particular product category in order to formulate trust beliefs about the online peer recommender. H2: The greater the expertise of a peer recommender, the greater the perceived trust of the recommender. H3: The greater the expertise of a peer recommender, the greater the perceived influence of the peer recommender on the choice decision. Rapport with the Recommender. Rapport refers to the affective bond that an individual may feel toward another person, generally arising from shared preferences, tastes, and lifestyles. Shared attitudes and similarity in demographic backgrounds have been
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shown to be significant factors that affect trustworthiness and influence in interpersonal communication (Brock, 1965; Feick & Higie, 1992; Gilly et al., 1998). Other researchers have used a similar construct, tie strength (Brown & Reingen, 1987; Duhan et al., 1997), to describe the nature of relationships between individuals, ranging from strong (e.g., friends and family) to weak (e.g., strangers and acquaintances). Duhan et al. (1997) found that perceived tie strength influenced the selection of sources sought for word-ofmouth recommendations. However, in the realm of online shopping, consumers often communicate with strangers with whom they have no meaningful prior relationshipso-called weak-tie sources. They may nonetheless choose to interact with these unfamiliar entities, using whatever information they have to make trust inferences (McKnight et al., 2002). As consumers seek to take advantage of all of the heuristics available within online environments, identification with the peer recommender on a personal level could compensate for some of the ambiguity that typically characterizes the online experience. Thus, consumers may use these cues as the foundation for their overall perception of the recommender and the product advice that is offered. In such cases, consumers may base their judgments of the trustworthiness and relevance of the recommendation upon the perceived similarity of the peers attitudes and tastes, as well as the feelings of rapport that they share with the peer recommender (Simons, Berkowitz, & Moyer, 1970; Woodside & Davenport, 1974). While researchers have debated the relative impact of individual source characteristics, the current empirical evidence suggests that consumers are likely to rely on close/similar sources when seeking product information and/or recommendations. Under some circumstances, the influence of a close/similar source may, in fact, be greater than that of an expert source (Gilly et al., 1998). H4: The stronger the rapport with a peer recommender, the greater the perceived trust of the recommender. H5: The stronger the rapport with a peer recommender, the greater the perceived influence of the peer recommender on the choice decision. The Moderating Effect of Shopping Goals. Motivations to engage in retail shopping have both
utilitarian and hedonic dimensions (Childers, Carr, Peck, & Carson, 2001). This dichotomy has been studied by researchers through the perspective of shopping as work (Fischer & Arnold, 1990; Sherry, McGrath, & Levy, 1993) versus the more experiential perspective of shopping as fun (Babin, Darden, & Griffin, 1994; Sherry, 1990). Similarly, the consumption of most goods and services involves both hedonic and utilitarian dimensions (Batra & Ahtola, 1990). Utilitarian goods/services (e.g., microwaves, personal computers, auto repair) are mostly sought to meet instrumental or functional needs. Conversely, hedonic goods/services (e.g., designer clothes, sports cars, massages) are consumed for socio-emotional benefits and experiential aspects of fantasy, fun, and pleasure (Holbrook & Hirschman, 1982; Dhar & Wertenbroch, 2000). Some products/services can satisfy either utilitarian needs, hedonic needs, or both, depending on the usage context (for example, visiting a restaurant for a quick lunch versus a celebratory dinner). Past research in advertising suggests that the effectiveness of an endorser or spokesperson is likely to be contingent on whether the product is viewed as a utilitarian or hedonic purchase (Feick & Higie, 1992; Stafford, Stafford, & Day, 2002). Decisions about utilitarian purchases are guided by cognitive beliefs about functional attributes, and there is general agreement across consumers about the importance of these attributes and their preferred levels (Feick & Higie, 1992). In such situations, consumers have been found to prefer endorsers who are experts or at least experienced with the good/service, since they would be considered able to evaluate functional attributes (Feick & Higie, 1992; Friedman & Friedman, 1979; Stafford, Stafford, & Day, 2002). Others opinions are also likely to be valued for hedonic or experiential products (e.g., movies, restaurants, sightseeing), perhaps more so than for utilitarian products, because recommenders are able to offer indirect experience regarding sensory aspects not conveyed by tangible attributes (West & Broniarczyk, 1998). For hedonic purchases in particular, preferences are likely to be heterogeneous (Feick & Higie, 1992). Therefore, consumers are likely to consider whether an opinion source shares their own preferences as a means of judging the diagnosticity of the recommendation (Gershoff et al., 2001; 2003). One way of evaluating shared preferences is by relying on the feeling of rapport shared with the recommender.
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Therefore, we suggest that consumers may focus on different characteristics of a peer recommender in order to judge trustworthiness, depending on the shopping goal. Specifically, we propose that individuals who are making a utilitarian choice will be more influenced by a recommender who is considered to be more of an expert than other recommenders. Conversely, individuals who are making a decision that is driven by hedonic wants will be more influenced by a recommender who is perceived to share personal characteristics, tastes, values, and/or beliefs. H6: The more utilitarian (or less hedonic) the shopping goal, the stronger the impact of expertise on the perceived influence of the recommender. H7: The more hedonic (or less utilitarian) the shopping goal, the stronger the impact of rapport on the perceived influence of the recommender.
The Impact of Peer Recommendation on Choice

Human agents, unlike most electronic agents, have the ability to be both process and outcome oriented; they can inform consumers about the various attributes of a particular product category while also offering recommendations that meet consumers needs (West et al., 1999). As a result, the provision of peer recommendations could directly influence the choice that consumers make with respect to a particular product. It must be noted that the traditional literature on word-of-mouth recommendation and interpersonal influence that examined source characteristics (e.g., Duhan et al., 1997; Feick & Higie, 1992; Gilly et al., 1998) focused on subjective perceptions of influence and behavioral intentions, but did not specifically examine whether actual choice was affected by the availability of a recommendation or by recommender characteristics. So, in this research, we are interested in measuring the effect of providing a recommendation on choice behavior by benchmarking relative to a control group of individuals who do not have access to a peer recommendation. Specifically, we test the following hypothesis: H8: Peer recommendation of an option will lead to a greater preference for the recommended option in product choice (compared to the condition in which peer recommendation is absent).
We also examine the influence of peer characteristics and shopping goals on choice preferences. Intuitively, we would expect that these measures would mimic the patterns proposed for the perceived influence of the peer recommender in hypotheses H3H7, and that conditions that were perceived to be more influential would also have a greater impact on behavior. However, this result is not guaranteed. If individuals are indeed strongly motivated to reduce the amount of effort they exert during the decision-making process in information intensive environments, they may well ignore peer characteristics and their behavior may be directly influenced by an effort-saving, easily available cue such as a peer recommendation. Prior research suggests that this is a distinct possibility; systematic effects on consumer choice have arisen from various information cues made salient at the time of decisionmaking, such as attributes primed via Web site background (Mandel & Johnson, 2002) or attributes that just happened to be included in the recommendation of an electronic agent (Hubl & Murray, 2003). Such findings highlight the importance of studying the effects of peer recommendations on behavior, distinct from their effects on subjective attitudes, as consumer behavior and attitudes may not always be correlated (Wicker, 1969; Zanna, Olson, & Fazio, 1980). Therefore, it would be meaningful and relevant to explore whether choice preferences are in fact affected by peer recommender characteristics and shopping goals in the same pattern as subjective measures (i.e., hypotheses H3H7).
STUDY ONE
Study I was designed specifically to examine the relationship between shopping goals and peer recommender characteristics on subjective measures (perceived influence and trust) and objective measures (choice preference) of the impact of peer recommendations on simulated decisions in online settings.
Methodology
In Study 1, we used a 2 2 2 (shopping goal: hedonic or utilitarian; peer expertise: high or low; peer rapport: strong or weak) between-subjects experimental design. In addition, we included two control groups, one utilitarian and one hedonic, in which subjects had to make choice decisions without access to any peer recommendations. Subjects were asked to imagine (or role play) that they needed to select a restaurant
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for a particular occasion, with either a hedonic- or utilitarian-motivated objective. Restaurants were selected as the product category for the decision-making task because consumers could have utilitarian as well as hedonic goals when choosing where to eat. Consumers typically need to consider a large number of variables when choosing a particular restaurant, such as ambience, quality of service, quality of food, pricing, and location. At the same time, in this category, consumers typically must also choose from a large consideration set. Therefore, they may be apt to refer to an online peer recommender when making a decision about a particular restaurant.
Procedure
A total of 252 undergraduate students in a large Midwestern university participated in the study, in return for a $5 incentive payment. The subjects were randomly assigned to 10 groupsthe eight experimental conditions (shopping goals peer expertise peer rapport) and the two control conditions (one for each shopping goal). All study stimuli were presented on a computer, within a simulated online environment created using the Macromedia Director software. Subjects were first asked to imagine (or role play) that they had a particular shopping goal (the selection of a restaurant for a particular outing) and then were introduced to an online restaurant guide where they could search a database of restaurants to make a choice. In the experimental conditions, all subjects were exposed to the recommenders short autobiography. On the same screen, subjects had the option to click one of two buttons: they could either search the database on their own or they could view a recommendation from the featured customer. In the two control conditions, the screen referring to a peer recommendation was omitted. The database consisted of 250 restaurant descriptions, which could be searched by various criteria: five types of cuisine (American, Contemporary American, French, Italian, or Asian), three price points (expensive, somewhat expensive, and moderate) and three locations (downtown, midtown, and suburbs). Subjects could search as long as they wished and could choose to view the peer recommendation at any stage during the search process. (See Appendix B for a sample screen.) If subjects opted to view the recommendation, they were shown a restaurant description that was designed to meet the needs of the specific shopping goal scenario to which they were assigned. (See Appendix C for description of restaurant recommendations.) All subjects who were assigned the utilitarian shopping goal saw a recommendation for Lawsons Lodge and all subjects who were assigned the hedonic shopping goal saw a recommendation for Nahes. These restaurants were selected from the 250 restaurants in the searchable database. Subjects who accessed the restaurant recommendation could also choose to look up its profile (location, price, cuisine) in the searchable database by clicking a button on the recommendation screen. When subjects were ready to make a choice by selecting a restaurant, they clicked
Stimuli
We manipulated shopping goals by presenting two different choice scenarios. In the hedonic condition, subjects were asked to imagine that they were selecting a restaurant for a birthday celebration with a group of close friends. In this scenario, subjects were told that their primary goal was to select a restaurant where they could have fun with their friends amid exciting surroundings. In the utilitarian condition, subjects were asked to imagine that they were selecting a restaurant for an office lunch meeting. In this condition, their goal was to select a restaurant that offered efficient and competent service and reliable food quality in order to facilitate a hassle-free business meeting. In both scenarios, the choice setting was a city that was relatively unfamiliar to the subjects, in order to avoid issues of familiarity with specific restaurants. Perceived expertise and rapport of the recommender were manipulated through short autobiographical profiles shown to each subject. Recommender expertise was cued through information regarding the number of restaurants that the recommender had visited in the area, the length of experience, and the breadth of exposure to restaurants as a product category. Rapport was cued through information pertaining to the recommenders personal tastes, lifestyle, and hobbies; to cue strong rapport, the peer recommender was described as having a lifestyle with which subjects would identify. The shopping goal manipulations and the autobiographical profiles of the peer recommender were developed after extensive pre-tests among a sample of eighty undergraduate students drawn from the same population as the final study. (See Appendix A for descriptions of peer recommender profile manipulations.)
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a button to exit the search screens and entered the name of the restaurant. Thereafter, subjects answered a set of questions relating to their perceptions of the task goal, perceived trust and influence of the peer recommender, perceptions of peer recommender characteristics in terms of expertise and rapport, and some measures of individual differences. Subjects took approximately 15 minutes to complete the process.
Results
Manipulation Checks. Checks were carried out to ensure that the manipulations of shopping goals, peer expertise, and rapport in the experimental cells were successful. Shopping goals were measured in terms of three original items. We developed the items that focused on the subjects perceptions of the choice scenario as being either functional/work/goal oriented or fun/pleasure oriented (Cronbach alpha 0.83). On a 17 scale, where 1 represented work or functional objectives, and 7 represented fun or pleasure objectives, the mean rating for the utilitarian goals scenario was 2.95, and the mean rating for the hedonic goals condition was 5.71. This was a significant difference, as indicated by the ANOVA model using shopping goals, rapport, and expertise as independent variables (F1,244 51.22, p .01). There was no main or interaction effect of the other manipulations on perceptions of shopping goals (p 0.41).
Perceptions of peer recommender expertise were measured in terms of three items: specific product knowledge (Brucks, 1985), experience with restaurants (Punj & Staelin, 1983), and relative knowledge as compared to others (Cronbach alpha 0.84). On a 17 scale, with higher numbers indicating higher expertise, the mean rating of perceived expertise was 4.46 in the high-expertise condition and 2.95 in the low-expertise condition, a significant difference as indicated by ANOVA (F1,244 12.35, p .01). Peer expertise perceptions were not affected by the manipulations of rapport or shopping goals (p 0.21). Perceived rapport was measured by three items that focused on the level of perceived closeness between the recommender and the subject, perceived similarity in outlook on life, and interest in socializing together, adapted from Gilly et al., 1998 (Cronbach alpha 0.81). On a 17 scale, where higher numbers indicate stronger rapport, the mean rating of perceived rapport was 4.00 in the strong rapport condition and 3.11 in the weak rapport condition. This was a significant difference as indicated by ANOVA (F1,244 5.28, p < .01). Perceived rapport was unaffected by the other manipulations (p > 0.18), indicating that we were successful in manipulating the three variables independently. See Table 1 for cell-wise means on the manipulated variables.
TABLE 1
STUDY 1: Mean Ratings of Manipulated Variables: Shopping Goals, Peer Expertise, Peer Rapport
HEDONIC SCENARIO STRONG RAPPORT HIGH EXP. (N 29) Scenario Typea,1 Expertiseb,2 Rapportc,3 5.83 4.54 4.1 LOW EXP. (N 35) 5.74 3.18 3.97 WEAK RAPPORT HIGH EXP. (N 32) 5.54 4.32 3.44 LOW EXP. (N 30) 5.70 3.08 3.22
UTILITARIAN SCENARIO STRONG RAPPORT HIGH EXP. (N 33) 3.05 4.58 3.88 LOW EXP. (N 34) 2.90 2.92 3.94 WEAK RAPPORT HIGH EXP. (N 29) 2.64 4.41 3.18 LOW EXP. (N 30) 3.21 2.62 2.63
a b c 1 2 3
1 to 7 scale, with 1 being utilitarian and 7 being hedonic. 1 to 7 scale, with 1 being low expertise to 7 being high expertise. 1 to 7 scale, with 1 being weak rapport to 7 being strong rapport. Cronbach alpha for scenario Cronbach alpha for expertise Cronbach alpha for rapport .83. .84. .81.
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Subjective Perceptions of Trust and Influence of the Recommender. In this analysis, we were interested in testing whether subjective feelings of trust had an impact on the perceived influence of the peer recommender (H1) and in determining how subjective perceptions were affected by peer recommender characteristics and shopping goals (H2H7). Trust perceptions were elicited using two items measured on a 17 agreedisagree scale: (1) I trust the peer recommender to the extent that if I were unable to make this decision on my own, I would allow him to make it for me, and (2) I have confidence in the peer recommender. The two items were significantly correlated (r 0.51; p < .00), and an average of the two items was used as an indicator of trust in the peer recommender. Perceived influence was measured using a single item that rated the extent to which subjects felt their decision-making process was influenced by the peer recommender, on a 17 scale. A linear regression was used to test whether perceptions of the recommenders level of influence was affected by subjective feelings of trust. This analysis revealed a positive relationship, indicating that the more subjects trusted the recommender, the more they felt they were influenced by the recommender` during decision-making (F7,249 12.93; p .01; standardized b 0.66, p .01). This evidence supports hypothesis H1. To assess the impact of peer recommender characteristics on perceived trust and perceived influence of the peer recommender, we used a three-way ANOVA
with shopping goals, peer expertise, and rapport as the independent factors. The ANOVA model for perceived trust showed a significant main effect for peer expertise (F1,244 16.54; p .01) and peer rapport (F1,244 8.36; p .02). Consistent with H2 and H4, subjects placed more trust in the peer recommender who had a higher perceived expertise (mean, 4.13) than in the one with a lower expertise (mean, 3.39); they also placed more trust in the recommender with whom they had a strong rapport (mean, 4.02) than with the one with whom they had a weak rapport (mean, 3.49). (Since the correlation between the items in the trust measure was relatively low, we repeated the analysis with each individual item whenever trust was used as a dependant variable in the analysis. It did not change the substantive nature of the results). Analysis of the subjective perceptions of influence of the peer recommender showed significant main effects of expertise (F1,244 7.86; p .01) and rapport (F1,244 6.96; p .01). Consistent with H3, subjects felt that they had been more influenced by the peer recommender with high expertise (mean, 4.02) than by the peer recommender with low expertise (mean, 3.28). Subjects also felt that they were influenced more by the peer recommender when they perceived a strong level of rapport (mean, 4.01) rather than a weak level of rapport (mean, 3.28), in line with H5. These results are presented in Table 2. In H6 and H7, we suggested that the impact of peer characteristics would depend on whether shopping
TABLE 2
STUDY 1: Main Effects of Peer Recommender Expertise and Rapport
EXPERIMENTAL CONDITION EXPERTISE HIGH LOW (N 123) (N 129) Perceived Trust Perceived Influence of Recommender 4.13 4.02 3.39 3.28 F VALUE (p VALUE) 16.54 (.00) 7.86 (.01) RAPPORT STRONG (N 132) 4.02 4.01 WEAK (N 120) 3.49 3.28 F VALUE (p VALUE) 8.36 (.00) 6.96 (.01)
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TABLE 3
STUDY 1: Interaction Effects: Shopping Goals by Peer Expertise
EXPERIMENTAL CONDITION UTILITARIAN HIGH EXPERTISE Perceived Influence of Recommender 4.02 LOW EXPERTISE 2.78 HEDONIC HIGH EXPERTISE 4.05 LOW EXPERTISE 3.80 INTERACTION F (p VALUE) 3.52 (.00)
goals were utilitarian or hedonic. The results support H6, as indicated by the two-way interaction between shopping goal and peer expertise (significant at p .06). Perceived influence was impacted by both variables, as a significant difference was found between the low expertise cells across the two types of shopping goals. While the means across the conditions did not vary significantly for the high-expertise conditions (mean [hedonic, high expertise] 4.05 and mean [utilitarian, high expertise] 4.02; p .93), there was a significant difference for the low-expertise conditions (mean [hedonic, low expertise] 3.81 and mean [utilitarian, low expertise] 2.78; p .01) that highlighted the greater importance of expertise in the utilitarian scenario. See Table 3 for the shopping goal expertise interaction effects. H7 was not supported; the two-way interaction between shopping goal and rapport was insignificant
at p .68. Specifically, perceived influence was impacted by rapport in a similar way in both types of shopping goals. The means were similar across shopping goals in the strong rapport conditions (mean [hedonic, strong rapport] 4.23 and mean [utilitarian, strong rapport] 3.80; p .25), as well as the weak rapport conditions (mean [hedonic, weak rapport] 3.63 and mean [utilitarian, weak rapport] 3.00; p .10). Contrary to H7, this suggests that the perceived rapport of the recommender may be important in both utilitarian and hedonic purchases. See Table 4 for the shopping goal rapport interaction effects. We did not obtain a three-way interaction between expertise, rapport, and shopping goal (p 0.1). Trust as a Mediating Variable. We hypothesized that trust would mediate the effect of recommender characteristics on subjects perceptions of the recommenders level of influence. Note that our analyses
TABLE 4
STUDY 1: Interaction Effects: Shopping Goals by Rapport
EXPERIMENTAL CONDITION UTILITARIAN STRONG RAPPORT Perceived Influence of Recommender 3.80 WEAK RAPPORT 3.00 HEDONIC STRONG RAPPORT 4.23 WEAK RAPPORT 3.63 INTERACTION F (p VALUE) 0.17 (.68)
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reported previously had revealed a significant main effect of rapport (p .01) and expertise (p .01) and a two-way interaction of shopping goal and expertise (p .06). Using the Baron and Kenny (1986) test for mediation, we ran another ANOVA model in which trust was included as an independent variable in addition to shopping goals, expertise, and rapport. We found that trust did have a significant effect (F1,243 9.11; p .01). Also, we found that the main effect of rapport (F1,243 .43; p .51) and expertise (F1,249 .14; p .71) became nonsignificant with the use of trust as a mediator. Further, we found that the significant interaction between shopping goal and expertise became weaker (F1,243 3.17; p .08); thus, trust served as a mediator of the effect on the peer recommenders perceived influence. Choice/Adoption of Peer Recommendation. This variable represents the proportion of subjects who selected the peer-recommended restaurant as the final choice in the respective shopping goal scenario. Our primary goal here was to compare the choice proportion in the experimental conditions to the proportion of subjects in the control conditions (where there was no peer recommendation available) who chose the exact same restaurant as a result of their own search efforts. This comparison would allow us to test hypothesis H8, that peer recommendation of an option would lead to an increased preference for it in choice. On an average, 44% of the subjects in the experimental conditions adopted the peer-recommended restaurant as their final choice, as compared to 7% of the subjects in the control conditions that chose the same restaurant based on their own search efforts. The betweensubjects analysis (using Dunnett t tests for multiple comparison with a single control group) using shopping goals and experimental conditions as factors showed that the model was significant (F9,303 4.84; p .00), with only the main effect of experimental factors being significant (F4,303 9.19; p .00). Further, the choice proportion in each of the four experimental conditions was significantly higher than the choice proportion in the control condition (p .00). This supports hypothesis H8 that peer recommendation can increase the preference for an option. Figure 2 depicts the choice proportions for the peer-recommended restaurant in the various conditions. We also tested whether peer-recommender characteristics had any impact on the adoption of the
60 52% 50 40 30 20 10 7% Hi Expertise Lo Expertise Hi Expertise Lo Expertise Control Hi Rapport Hi Rapport Lo Rapport Lo Rapport 48% 42% 33%
FIGURE 2
Impact of Providing Peer Recommendation on ChoiceStudy 1
recommendation, using a logistic regression with shopping goals, expertise, and rapport as factors. The overall model was insignificant (x2 .86, p .86), indicating that adoption of the peer recommendation was consistently high across conditions. Interestingly, even when the peer recommender was described as low in expertise and rapport, almost 33% of the participants in that condition chose the recommended option.
STUDY TWO
From a consumer welfare point of view, as well as a managerial perspective, the findings from Study 1 on the behavioral impact of peer recommendations on product choice are particularly intriguing. While the perceived influence measure used in Study 1 did not predict the actual influence of peer recommendation on choice, our findings do suggest that recommender characteristics affect the overall search process. This apparent inconsistency between perceived influence and actual choice may have been influenced by several factors: (1) consumers inability to report on what influences their behavior, (2) the continuous scale measure of perceived influence may have been more sensitive than the binary choice measure, and/or (3) recommender characteristics may impact the overall search process, but not the choice that subjects make. Hence, Study 2 was designed to further explore the impact of recommendations provided by different sources during online search. Findings from Study 1 suggest that consumers may perceive peer suggestions as being more useful or more trustworthy than they perhaps should, simply
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because these suggestions come from peers. Other researchers have pointed out similar trends about consumers relying on proxy signals, such as the effort and the financial cost of providing information, as a means to gauge the informations credibility or adequacy (Wathen & Burkell, 2002). Collectively, these findings raise interesting questions that motivated Study 2: (1) Do consumers accept other types of information cues as readily as they might accept peer recommendations when they are making decisions in an information-intense environment? (2) Would recommendations from others, such as customer service representatives or other site employees, be as persuasive as those of peer consumers? and (3) Would other salient information cues, such as site-sponsored ads, be as effective as personal recommendations in influencing product choices? Online consumers are becoming savvier in managing the information they receive (Varadarajan & Yadav, 2002), and often seek various means to evaluate the reliability or credibility of information resources they encounter during search processes. Researchers have suggested that peer consumers may have somewhat of a superior status as trustworthy information sources compared to other types of resources (Wathen & Burkell, 2002; West et al., 1999). Our findings from Study 1 lend credence to this belief, demonstrating that consumers are indeed greatly influenced by peer recommendations. To further explore the perception of information received from peer versus non-peer sources, we sought to determine if other easily available information resources, such as editorial recommendations or sponsored ads, would be viewed as favorably as peer recommendations. An editorial recommendation may be considered a high credibility cue offered by a source with expertise in the particular product category, whereas a site-sponsored advertisement may be regarded as a lower credibility cue. Thus, we wanted to examine how consumers would utilize peer recommendations relative to these competing information cues, the relative importance they accord to each cue, and its impact on decision-making behavior such as search effort and choice preference. We also examined whether consumers are influenced by peer profile information such as rapport and expertise characteristics while deciding whether to use peer recommendations during decision-making. Our intention was to
re-investigate Study 1s finding that peer credibility or profile information did not have a significant impact on the choice decision to adopt a recommendation, although it influenced perceived trust and perceived influence of the peer recommender. In Study 2, we investigated the two factors that are likely to influence the preference for peer recommendation informationthe impact of shopping goals and peer credibility information (i.e., peer characteristics) in a decision-making situation where other information resources were also available as decision aids. Specifically, we assessed the preference for expertise and rapport characteristics in the recommender by offering a choice of two sources of recommendation: an editorial staff employee who may be perceived as having higher domain expertise and a peer consumer who may be perceived as having higher rapport. Researchers have observed that the influence of a peer or a similar source often may be greater than that of an expert source or of corporate employees (Gilly et al., 1998; Wathen & Burkell, 2002), but this is likely to be contingent on the nature of shopping goals. Based on our conceptual framework, the preference for recommendations from peers is likely to be greater for hedonic or experiential products and services where consumers may infer similarity in product tastes from similarity in profile or shared rapport. Conversely, advice from those perceived to be experts in a domain may be more important than peer advice for utilitarian decisions. Thus, in line with hypotheses H6 and H7, we predict that: H9a: The more hedonic (or less utilitarian) the shopping goal, the greater the preference for using peer recommendation relative to editorial recommendation. Similarly, based on the role of peer characteristics outlined in our conceptual framework and hypotheses H2H4, a peer consumer who is perceived to be higher in expertise and rapport would exert a greater influence than one who is lower in expertise and rapport. Hence, when consumers are choosing between two sources of recommendation, we predict: H9b: The more credible (higher in expertise and rapport) the peer profile, the greater the preference for using peer recommendation relative to editorial recommendation.
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Further, as in Study 1, we investigated the impact of recommendation availability on choice preferences. The fact that recommendations can be obtained from human agents, whether peers or customer service employees, may be very compelling for online shoppers as they try to make sense of an informationintensive environment that is also plagued with intangibility. We consider the possibility that online recommendations may be serving as an effort-saving aid and that consumers may reduce the amount of search they put into decision-making if recommendations are available. So, in this study, we specifically measured the impact of recommendations on the level of search effort during choice as well as on choice preferences, by benchmarking relative to a control group with no access to recommendations. While prior research has demonstrated that online consumers are easily influenced by any salient information cue in the environment (Hubl & Murray, 2003; Mandel & Johnson, 2002), consumers may be capable of discriminating between cues that vary in credibility. Personal recommendations are likely to be perceived as more credible than other types of information (Wathen & Burkell, 2002; West et al., 1999), such as sponsored advertisements that may be made salient during online decision-making. Therefore, in Study 2, we monitored whether subjects discriminated between peer or editorial recommendations and other suggestive cues (such as sponsored ads) while selecting a potential decision aid.
Study 1. Thus, in the utilitarian goal scenario, participants were asked to imagine (role play) that they were choosing a restaurant for a business luncheon and, in the hedonic scenario, that they were choosing a restaurant for an exciting birthday celebration. Within each shopping goal condition, subjects were randomly assigned to one of three conditions: a control condition that offered no recommendations during the decision-making task, a high-credibility peer profile condition that offered a peer recommendation from a peer described as high in rapport and expertise in the specific product domain, and a low-credibility peer profile condition that offered a peer recommendation from a peer described as being low in rapport and low in expertise. As in Study 1, all stimuli were presented on a computer within a simulated online environment created using the Macromedia Director software. The participants were told that they were at a restaurant guide Web site and asked to search the database of restaurants in order to make their choice. In the highand low-credibility peer profile conditions, subjects had a choice of four clickable buttons during the decision-making process, labeled Search the Database, View Customer Recommendation, View Editorial Recommendation, and View Site Sponsors Ad. Prior to this screen, the participants were told that that they could access either a customer recommendation or an editorial recommendation and were shown the profiles describing the featured peer customer and editor. The peer profile description was taken from those pre-tested and used in Study 1, with the high-expertise, high-rapport profile being used in the high-credibility information condition and the low-expertise, low-rapport profile being used in the low-credibility information condition. The editorial member providing the editors restaurant recommendation was described as the Executive Chef of Gourmet magazine. Thus, subjects had sufficient information about the peer customer and the employee providing the recommendations, based on which they could decide whether to search the database on their own and/or access any of these information cues at any time during the decision-making process. In order to obtain accurate measurements of subjects preferences between the two recommendation sources, the experimental design allowed subjects to access only one type of recommendation, either from a peer or from the editor. (The software
Methodology
Study 2 was designed as a 2 3 (shopping goal: utilitarian or hedonic; peer profile: control or no recommendation, high-credibility information, lowcredibility information) between-subjects design. A convenience sample of 150 undergraduate students at a large Midwestern university participated in this study; they were randomly assigned to one of the six experimental conditions. Subjects were given $5 gift certificates in exchange for their participation in the study. Stimuli and Procedure. The stimuli used for this study were in many respects similar in form and presentation to the stimuli in Study 1. We employed the same simulated decision-making task, shopping goal manipulations, and peer profile descriptions used in
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program ensured that if one type of recommendation was accessed, the clickable button for the other recommendation source was no longer available.) The restaurant recommendation information was the same for both the editor and the peer recommendations; the recommended restaurants were the same with descriptions that were tailored to suit the two shopping goal scenarios. In the Control condition, there was no reference to any recommendation information. In this condition, subjects could search the database and/or view the sponsored banner ad before making a restaurant choice. The experimental software monitored subjects choice of information cues, the order in which they accessed these cues, the number of times they searched, and the time spent on the choice task. When subjects indicated that they were ready to make a decision, they were asked to indicate their restaurant choice.
Results
At the end of the study, we assessed subjects perceptions of the task in terms of shopping goals, peer expertise, and rapport. Because these manipulations are identical to those in Study 1 and because the perceived ratings indicated they also succeeded in this study, we do not discuss them again, for the sake of brevity. Preference for Recommendation Source. To assess subjects preference for the peer customer as a recommendation source, we examined two dependent variables: the proportion of subjects who chose to view the customer recommendation rather than the editorial recommendation or other cues, and the priority accorded to the peer recommendation during subjects selection of information cues during this decisionmaking task. We based our analysis on the data from the 94 subjects assigned to the four (2 shopping goals 2 peer profile credibility) conditions. Subjects had three options when considering recommendations during their decision-making task: they could access a peer recommendation or an editorial recommendation, or they could decide not to consider any recommendation at all. Overall, 47% of the subjects chose to access the peer recommendation, 31% chose to access the editors recommendation, and 22% did not access any type of recommendation. Shopping goals, peer profile information, and their interaction
effect were used as independent variables in CATMOD analysis and the interaction effect was not significant (p 0.21). Therefore, we tested a main effects model and the results of this procedure showed that the main effect of shopping goals was significant (x2 6.54, df 2, p .04), with the pattern of results as predicted in H9a. About 59% of the subjects chose to view a peer recommendation when the shopping goal was hedonic in nature, which is significantly higher than the 33% (p .01) of subjects who chose to view a peer recommendation in the utilitarian goal condition. Conversely, about 42% of the subjects chose to view an editorial recommendation when their shopping goal was utilitarian in nature, significantly higher than the 20% (p .02) of subjects who chose to view an editorial recommendation in the hedonic shopping goal condition. The proportion of participants that did not access any recommendation did not vary across the two goal conditions (p 0.67). See Figure 3 for the pattern of recommender preferences in various conditions. The main effect of peer profile information was not significant (x2 0.22, df p 0.9), with about 49% of participants choosing to view the peer recommendation in the high-credibility peer information condition and 43% of subjects choosing to view the peer recommendation in the low-credibility peer profile condition (see Figure 3). These findings do not support the prediction made in H9b. While these findings seem to suggest that participants did not pay attention to the peer profile information, other results discussed below suggest otherwise.
59% 42% Peer
49%
Peer 43%
33% 33% 30% Editor 20% High Peer Credibility Low Peer Credibility Editor
Utilitarian
Hedonic
Peer Recommendation
Editor Recommendation
FIGURE 3
Preference for RecommenderPeer Versus EditorStudy 2
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Another measure of the level of importance or priority that subjects assigned to peer recommendation is the stage at which they chose to look at this information relative to other information resources available for decision making. Specifically, we analyzed subjects selection of the first information cue in the task as an indication of the relative confidence in that information resource. We found that 33% of the subjects chose to view the peer recommendation at the very beginning of their task, 22% began with the editorial recommendation, and 38% started off by searching the database on their own. Only one or two subjects in each condition began their decisionmaking process by examining the site-sponsored ad. This finding suggests that subjects did discriminate between information cues and may have perceived the ad as a less credible information resource. Using data categorized as peer recommendation, editorial recommendation, or others to examine the selection of the first information cue through CATMOD analysis showed that the interaction effect was not significant (x2 2.64, df 2, p .27). The main effects model revealed a significant effect of shopping goals (x2 6.04, df 2, p .05) and a marginally significant effect of peer profile information (x2 4.56, df 2, p .10). Examination of differences between the conditions revealed that the patterns supported the prediction made in H9a and was in the direction consistent with that proposed in H9b. About 41% of the subjects who had hedonic shopping goals began their decision task by viewing the peer recommendation, marginally higher than the 24% of subjects in the utilitarian goal condition (p .09), who began the task by viewing the recommendation given by their peer. Conversely, about 33% of the participants who had utilitarian shopping goals began their decision-making process by accessing the editorial recommendation, significantly higher than the 12% of subjects who had hedonic shopping goals (p .01). There was not a significant difference found in the proportion of participants that pursued other actions (e.g., searched the database or clicked on the ad). These findings support our hypothesis H9a in that subjects preferred peer recommendations when they had hedonic shopping goals and editorial recommendations when they had utilitarian shopping goals. See Figure 4 for the proportions in various conditions.
Search D-Base Search D-Base 36% 33% 24% Editor Utilitarian 12% High Peer Credibility Peer 41% 41% Peer 27% 25% Editor
50%
24% 20% Low Peer Credibility
Hedonic
Peer Recommendation
Editors Recommendation
Search Database
FIGURE 4
Preference for Recommendation (First Cue SelectionStudy 2)
The findings for the effect of peer profile information were also in the predicted direction. When the peer recommender was described as high in expertise and rapport, about 41% of the participants accessed the peer recommendation as the starting point, compared to 24% in the low-credibility peer profile condition (p .07). It is interesting to note that 50% of the participants in the low-credibility condition chose to start their decision task by searching the database on their own, instead of opting to view the editorial recommendation. This proportion was significantly lower (27%, p .03) in the high-credibility condition. The proportion that looked at the editorial recommendation first did not vary across the two peer profile conditions. See Figure 4. In sum, our findings demonstrate that peer consumers are highly preferred as recommendation sources, especially for hedonic purchases. This finding is strengthened by the fact that subjects still preferred the peer recommendation to the employee recommendation in the hedonic goals condition, even when the peer was described as being low in rapport and expertise. In these cases, subjects accorded less priority to the peer recommendation and they compensated for the recommenders lack of expertise and rapport by investing more effort in their own independent search of the database. Again, we conclude that subjects may be validating the information that was provided by the low rapport/low expertise recommender in order to bolster the credibility of the questionable peer.
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TABLE 5
STUDY 2: Effect of Recommendation Availability and Peer Profile on Decision Process
CONTROL (NO RECOMMENDATION) Choice of Recommended Option (%) Search Effort: Number of Searches Search Effort: Search Time (seconds) Sponsored Ad Click-Through (%) 13 4.55 129.9 46
LOW-CREDIBILITY PEER PROFILE 41 3.24 111.2 30
HIGH-CREDIBILITY PEER PROFILE 38 1.83 68.3 27
MAIN EFFECT OF PEER PROFILE 10.67*(p 5.77**(p 3.63**(p 5.31*(p .00) .00) .03) .07)
* Wald Chi-Square statistic (d.f.
2) from logistic regression; ** F (2, 144) statistic from ANOVA.
The Impact of Recommendation on Information Processing. Last, we explored the impact of providing recommendations on the final choice of restaurant, the level of search effort that subjects exerted during the online task and the use of sponsored ads by comparing the control conditions (where no recommendations were provided) to the experimental conditions where subjects had access to the peer or editorial recommendation. We analyzed the proportion of individuals who selected the recommended restaurant as their final choice using a logistic regression with shopping goals and peer profile information as independent factors. The overall model was significant (Wald x2 13.75, df 5, p .02), with only one significant main effect of the peer profile information (Wald x2 10.67, df 2, p .005). As indicated in Table 5, a lower proportion of subjects in the Control (no recommendation) condition chose a recommended restaurant based on their own search through the restaurant database (X 0.13). This was significantly lower than the proportion of subjects adopting the recommended restaurant in the high-credibility peer profile condition (X 0.38, p .01) and in the lowcredibility peer profile condition (X 0.41, p .01). We measured the number of times that participants searched the restaurant database and the time they spent searching the database as indicative of their decision-making effort in the task. The analyses results are presented in Table 5. These results suggest that providing recommendation reduces decisionmaking effort, but it is contingent on the credibility of the recommender. In other words, when the peer profile was described as being low in expertise and
rapport, subjects invested more effort in the search process than did those subjects who were shown a highly credible peer profile (high expertise and strong rapport). In fact, subjects who were exposed to low credibility peer profile searched almost as much as those who did not have access to recommendations at all (the control group). This is an intriguing finding because, in the former case, subjects had the option of relying on editorial recommendation as an effortsaving information resource. We also monitored participants proclivity to use any suggestive or trivial information cues that may be readily available during online decision making by measuring the number of click-throughs on a sponsored banner ad for a restaurant. The proportion of clicks on the site sponsors ad (overall mean 35%) was analyzed using a logistic regression with shopping goals, peer profile, and their interaction as factors. The pattern of means (see Table 5) indicated that the provision of recommendations reduced subjects interest in viewing the sponsored ad, relative to the Control condition. In summary, a comparison of subjects assigned to the control group (where recommendations were not provided) and subjects assigned to the experimental groups (where subjects were exposed to either the peer or editorial staff recommendation) clearly indicated that the provision of recommendations influenced the actual choices that subjects made, the amount of search effort that subjects invested in the decision-making task, as well as the interest in viewing sponsored advertisements in the category.
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DISCUSSION
Consumers in virtual environments must divide their cognitive resources between both experiential (net surfing) and goal-directed (online shopping) activities, so that the level of attention they devote to online tasks may be limited (Hoffman & Novak, 1996). The results from Study 1 are consistent with this perspective as well as other research findings that suggest that consumers are eager to use salient and accessible resources in order to navigate through the cognitive challenges of the online search process (Hubl & Trifts, 2000). Specifically, we found that a large proportion of consumers adopted the peer recommended option, irrespective of the peer recommenders profile. This suggests that the provision of a peer recommendation can serve as an invaluable resource for consumers, especially when they are overwhelmed by the amount of information that is available to them during online shopping experiences. We found that while many participants choices were positively influenced by the mere availability of a recommendation, they were generally more discerning in evaluating the trust they placed in the peer recommender and the peer recommenders level of influence. Our results suggest that these subjective perceptions were significantly affected by recommender characteristics and shopping objectives. In particular, we found that perceived peer expertise is more important when consumers have utilitarian shopping motivations than when they have hedonic shopping motivations. However, perceived rapport with the recommender was found to be equally influential in both utilitarian and hedonic shopping situations. These findings stand in contrast to previous research done on utilitarian and hedonic shopping motivations within traditional retail settings, where researchers found that consumers with hedonic shopping objectives were more influenced by peers with whom they shared strong rapport or social ties, while consumers with utilitarian shopping objectives were more influenced by the recommenders level of expertise (Feick & Higie, 1992). Consistent with previous research on the use of effortreducing cues during online search processes (Bechwati & Xia, 2003; Hubl & Trifts, 2000; Swaminathan, 2003; West et al., 1999; Hubl & Murray, 2003), our findings from both studies
revealed that individuals do use recommendations as a means to reduce the amount of effort exerted during the online search process. In Study 1, we showed that consumers, who were exposed to peer recommenders with varied levels of expertise and rapport, were influenced by the mere provision of a recommendation, irrespective of the recommenders credibility. Similarly, our results from Study 2 showed that those individuals who were exposed to the high-credibility peer recommender not only utilized the recommendation to make their final selection, but were also able to reduce the amount of search effort invested in the overall process. Conversely, those who were exposed to the low-credibility recommender invested more time in their own independent search. In fact, these subjects searched almost as much as those subjects who were assigned to the control group in which no recommendations were available. We also found that subjects who were not provided any recommendation conducted more searches on their own and were more likely to pursue any readily available effort-reducing cue, such as the site-sponsored advertisement, while making online decisions. It is also important to note that prolonged search does not necessarily guarantee that consumers will find more information or that the information that they uncover will influence their final choice. As such, these findings highlight the uniqueness of the Internet environment by showing that online consumers may view recommendations differently than consumers in face-to-face settings as they attempt to manage the risks presented by this challenging retail environment. In Study 2, we also explored the perceptions that consumers may hold about recommendations as one type of effort-reducing cue in relation to other cues or information that consumers may obtain during online search processes. Our findings suggest that consumers clearly prefer peer or editorial recommendations over sponsored ads. In other words, consumers may feel that recommendations, whether peer or editorial, are in some way more trustworthy than ads that may appear during their shopping task. This finding complements the results of our first study, demonstrating that while individuals use peer recommendation as a viable information resource, they are not equally influenced by all available information cues.
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The findings of the research may be limited by the fact that subjects simulated or role-played decisionmaking during their respective online tasks. There were no physical or psychological benefits and/or costs associated with the choices that they made during search. Therefore, our findings may not be generalizable across all types of online decision-making tasks. In addition, all of the information that was included in the peer and editorial recommendations was positive in nature. Thus, the findings of this research may not generalize to negative reviews. Our findings may also be limited by the fact that the quantity of information in the peer versus editorial recommendations varied in terms of amount. In order to determine the impact of recommendations on consumer choice, replications of this research might consider standardizing the information that is offered in the test and control conditions and/or offering the same information across peer and editorial recommendations. Lastly, subjects made selections for only one type of product category, restaurants. Collectively, these factors speak to the need for further exploration of online recommendations across product categories and/or in real-life decision-making processes. As peer-to-peer exchanges within virtual communities have been linked to increased customer loyalty (Frank, 1997), the exploration of the manner in which these exchanges occur remains a fruitful research area. We have examined consumer perceptions of peer vs. editorial recommendations; the next step would be to explore other means that consumers use to evaluate the credibility of recommendation agents within online environments. In this study, we focused on the provision of recommender characteristics and attributes via biographical sketches. However, many online companies now offer rating systems that evaluate recommenders in terms of how credible they have been across a number of product recommendations and over time. These rating systems have become popular on online retail sites such as Amazon.com, where consumers can provide ratings (one to five stars) along with an explanation of their rating. These ratings may be linked to general consumer satisfaction with online shopping experiences (Koehn, 2003). Future research might include an examination of the consistency in ratings across raters and the overall impact of rankings on the level of trust that consumers place not only in the recommender, but also in the site and/or retailer.
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APPENDIX A
MANIPULATIONS OF RAPPORT AND PEER RECOMMENDER EXPERTISE

to own my restaurant. Until then, I will continue to savor the aroma of my hobby! Strong Rapport/Low Source Expertise I grew up in the Midwest, spending most of my time as a kid in (City X). As a recent college grad (go XXX!), I enjoy music and parties! I really get into watching MTV and going to live concerts. Overall, I consider myself to be very outgoing and pretty open-minded. I guess that is why I enjoy dining out so much. Actually, I began my exploration of restaurants about
Strong Rapport/High Source Expertise I grew up in the Midwest, spending most of my time as a kid in (City X). As a recent college grad (go XXX!), I enjoy music and parties! I really get into watching MTV and going to live concerts. Overall, I consider myself to be very outgoing and pretty open-minded. I guess that is why I enjoy dining out so much. Actually, I began my exploration into the world of dining several years ago. I have reviewed at least 100 restaurants for a dozen or so web sites and I am currently a critic for a local newspaper and cable show. One day I hope
35
two-three months ago. In fact, I have only visited a few restaurants. I am not familiar with most of the terminology, but I have a few ideas about what I like. I am learning a little more each day as I savor the aroma of my new hobby. We a k R a p p o r t / H i g h S o u r c e E x p e r t i s e I grew up out west, spending most of my childhood in Omaha, Nebraska. I consider myself to be a self-made man. I didn't spend much time in school. Basically, everything I know I taught myself. As a retiree, I enjoy bingo and playing the horses. I am kind of an introvert, but I do enjoy eatin' at nice places. Actually, I began studying restaurants several years ago. I have reviewed at least 100 restaurants for a dozen or so web sites and I am currently a critic for a local newspaper and cable show. One day I hope to own my
restaurant. Until then, I will continue to savor the aroma of my hobby! We a k R a p p o r t / L o w S o u r c e E x p e r t i s e I grew up out west, spending most of my childhood in Omaha, Nebraska. I consider myself to be a self-made man. I didn't spend much time in school. Basically, everything I know I taught myself. As a retiree, I enjoy bingo and playing the horses. I am kind of an introvert, but I do enjoy eatin' at nice places. Actually, I began studying restaurants two-three months ago. In fact, I have only visited a few restaurants. I am not familiar with most of the terminology, but I have a few ideas about what I like. I am learning a little more each day as I savor the aroma of my new hobby
APPENDIX B
SAMPLE SCREENS FROM STUDY DEPICTING RESTAURANT DATABASE SEARCH RESULTS
36
APPENDIX C
Hedonic Scenario
DESCRIPTION OF PEER RECOMMENDATIONS

Utilitarian Scenario Lawsons Lodge is a great restaurant. Not only can you except to be impressed with Lawsons, but you can also expect the staff to be quite conscientious and attentive to your needs. Lawsons is a restaurant where you can always count of excellent service and superb food. Very dependable. Lawsons Lodge a great pick for business and pleasure!
Nahes is a spectacular restaurant. Not only does it offer good times and a lot of fun, it is also known for superb food. Go to Nahes for action and excitement. With fine food, great music and a hip crowd, Nahes is the place for a happening night on the town. Try the apple or chocolate martinis! They are the best around. Nahes the right pick for a special occasion!
APPENDIX D
Major Constructs
MEASUREMENT
3. Prior to your participation in this study, how would you rate your level of experience in terms of on-line recommendations? (1 not experienced at all, 7 very experienced) Ta s k D i f f i c u l t y ( T S K D I F ) How would you rate this task in terms of difficulty? (1 extremely difficult, 7 not difficult at all) Ta s k I m p o r t a n c e / I n v o l v e m e n t ( T S K I M P ) 1. If you were making this decision, how important would this decision be for you? (1 not important at all, 7 extremely important) 2. How concerned would you be about making the best selection if you were making this decision in real life? (1 not concerned at all, 7 very concerned) 3. This purchasing situation was relevant to me. (1 strongly disagree, 7 strongly agree) Susceptibility to Interpersonal Influence (INTINF) 1. Do you rely on others when making purchasing decisions? 2. Do you believe what others tell you regarding products? (1 never, 7 always) Manipulation Checks Hedonic, Utilitarian (HED, UT) 1. Considering the scenario you were faced with, what did you base your restaurant choice on? (1 rational attributes, 7 gut feelings) 2. Considering the scenario that was presented to you, how would you describe the choice of a restaurant for this occasion? (1 achieving a goal, 7 experiencing pleasure) 3. What adjective would best describe your decisionmaking process during your search for a restaurant? (1 logical, 7 emotional)
Perceived Influence (INF) To what extent were you influenced by information gathered from John? (1 not influenced at all, 7 very influenced) Tr u s t ( O V T R U S T ) 1. I trust John to the extent that if I were unable to make this decision, I would allow him to choose a restaurant for me. 2. I have confidence in John. (1 strongly disagree, 7 strongly agree) Rapport (RPT) 1. If you were to meet John, how likely would you be to spend time socializing with him? (1 strongly disagree, 7 strongly agree) 2. Considering Johns profile, how close would you feel to him if you were to meet him? (1 not close at all, 7 very close) 3. Considering your outlook on life, how similar are you and John? (1 not similar at all, 7 very similar) Expertise (EXP) 1. John is an expert on restaurants. 2. I trust John because of his extensive experience with restaurants. 3. Compared to other people, John has reviewed a large number of restaurants. (1 strongly disagree, 7 strongly agree) Individual Differences Online Experience (OLEXP) 1. Prior to your participation in this study, how would you rate your level of experience in terms of going on-line? 2. Prior to your participation in this study, how would you rate your level of experience in terms of on-line browsing/shopping?
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Online Peer and Editorial Recommendations, Trust, and Choice in Virtual Markets

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ONLINE PEER AND EDITORIAL RECOMMENDATIONS, TRUST, AND CHOICE IN VIRTUAL MARKETS

DONNAVIEVE SMITH, SATYA MENON, AND K. SIVAKUMAR

his research examines the influence of recommendations on consumer

University, Bethlehem, PA; e-mail: k.sivakumar@lehigh.edu

JOURNAL OF INTERACTIVE MARKETING

CONCEPTUAL FRAMEWORK AND HYPOTHESES