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The Effect of Social Interaction on Economic Transactions: Evidence from Changes in Two Retail Formats

Author

Listed:
  • Avi Goldfarb

    (Rotman School of Management, University of Toronto, Toronto, Ontario M5S 3E6, Canada)

  • Ryan C. McDevitt

    (Fuqua School of Business, Duke University, Durham, North Carolina 27008)

  • Sampsa Samila

    (National University of Singapore, Singapore 119245)

  • Brian S. Silverman

    (Rotman School of Management, University of Toronto, Toronto, Ontario M5S 3E6, Canada)

Abstract

Examining changes in two different retail formats, we show that consumers alter their purchases depending on the retail environment. In both settings, the change in behavior coincides with a reduction in the interpersonal interaction required to complete a transaction. As such, we contend that the format changes reduced a “social friction” that would otherwise inhibit consumers due to an implicit cost associated with ordering certain items in social settings. This paper was accepted by Pradeep Chintagunta, marketing .

Suggested Citation

  • Avi Goldfarb & Ryan C. McDevitt & Sampsa Samila & Brian S. Silverman, 2015. "The Effect of Social Interaction on Economic Transactions: Evidence from Changes in Two Retail Formats," Management Science, INFORMS, vol. 61(12), pages 2963-2981, December.
    • Handle: RePEc:inm:ormnsc:v:61:y:2015:i:12:p:2963-2981
    DOI: 10.1287/mnsc.2014.2030
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    2. Jean-Marc Bourgeon & José de Sousa & Alexis Noir-Luhalwe, 2022. "Social Distancing and Risk Taking: Evidence from a Team Game Show [Distanciation sociale et prise de risque : Les résultats d'un jeu d'équipe]," SciencePo Working papers Main hal-03792423, HAL.
    3. Nils Engelbrecht & Tim-Benjamin Lembcke & Alfred Benedikt Brendel & Kilian Bizer & Lutz M. Kolbe, 2021. "The Virtual Online Supermarket: An Open-Source Research Platform for Experimental Consumer Research," Sustainability, MDPI, vol. 13(8), pages 1-25, April.
    4. Abhishek Nagaraj, 2018. "Does Copyright Affect Reuse? Evidence from Google Books and Wikipedia," Management Science, INFORMS, vol. 64(7), pages 3091-3107, July.
    5. Ratchford, Brian & Soysal, Gonca & Zentner, Alejandro & Gauri, Dinesh K., 2022. "Online and offline retailing: What we know and directions for future research," Journal of Retailing, Elsevier, vol. 98(1), pages 152-177.
    6. Ioannis Bellos & Stylianos Kavadias, 2019. "When Should Customers Control Service Delivery? Implications for Service Design," Production and Operations Management, Production and Operations Management Society, vol. 28(4), pages 890-907, April.
    7. Jose A. Flecha Ortiz & María Los M. Santos Corrada & Evelyn Lopez & Virgin Dones & Vivian Feliberty Lugo, 2023. "Don't make ads, make TikTok’s: media and brand engagement through Gen Z's use of TikTok and its significance in purchase intent," Journal of Brand Management, Palgrave Macmillan, vol. 30(6), pages 535-549, November.
    8. Christian Peukert & Imke Reimers, 2022. "Digitization, Prediction, and Market Efficiency: Evidence from Book Publishing Deals," Management Science, INFORMS, vol. 68(9), pages 6907-6924, September.
    9. Xicheng Yin & Hongwei Wang & Qiangwei Xia & Qican Gu, 2019. "How Social Interaction Affects Purchase Intention in Social Commerce: A Cultural Perspective," Sustainability, MDPI, vol. 11(8), pages 1-18, April.
    10. Katherine Harris‐Lagoudakis, 2022. "Online shopping and the healthfulness of grocery purchases," American Journal of Agricultural Economics, John Wiley & Sons, vol. 104(3), pages 1050-1076, May.
    11. Rachel Cummings & Federico Echenique & Adam Wierman, 2016. "The Empirical Implications of Privacy-Aware Choice," Operations Research, INFORMS, vol. 64(1), pages 67-78, February.
    12. Cardinali, Rebecca & Lusher, Lester & Taylor, Rebecca & Villas-Boas, Sofia Berto, 2022. "Stigma Goods, Self-Checkout Adoption, and Changes in Purchasing Decisions," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322427, Agricultural and Applied Economics Association.
    13. Olden, Andreas, 2018. "What Do You Buy When No One’s Watching? The Effect of Self-Service Checkouts on the Composition of Sales in Retail," Discussion Papers 2018/3, Norwegian School of Economics, Department of Business and Management Science.
    14. Arun G. Chandrasekhar & Benjamin Golub & He Yang, 2018. "Signaling, Shame, and Silence in Social Learning," NBER Working Papers 25169, National Bureau of Economic Research, Inc.

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