A new study from Houston’s Rice University may spell bad news for online forums of businesses like eBay.
The study found that people who participate in chat rooms and forums in places like the auction website make riskier financial decisions, bid more, and buy more, based on the mistaken belief that their online pals have “got their back” if they lose a lot of money.
Researchers — Utpal Dholakia, professor of management at Rice; Jack (Xinlei) Chen and Juliet Zhu, professors of management at the University of British Columbia; and René Algesheimer, chair of marketing and market research at the University of Zurich — conducted a series of field and laboratory studies, and The Journal of Marketing Research will soon publish the study, “Does Online Community Participation Foster Risky Financial Behavior?”
After examining the behavior of hundreds of people participating in message boards and chat rooms on sites that involve financial transactions, they found that the higher the level of participation in the forums, the looser people were with their cash.
Those folks in the forums? They are strangers, and they probably won’t save you, says Dholakia.
“Participants in these sites somehow come to believe that their fellow community members will come to their aid when something goes wrong, but in reality, they are out there on their own and could suffer adverse consequences,” Dholakia said in a press release from Rice.
This news doesn’t sound earth-shattering for auction sites, where it makes sense that a customer could be egged on by his buddies to bid a little higher on something like an autographed baseball. But where it could get ugly is peer-to-peer lending, which has been called “the new banking.” It is booming online, and San Francisco’s Prosper.com, founded in 2006, recently announced it grew 370 percent year-over-year.
So what does this mean for your clients? In the short term, big customer losses may cause a flash of bad publicity. The study points out, however, that the burned customers have long-term effects, as the losses tarnish reputations and brands.
Rice says the results don’t apply to sites such as Facebook, where people socialize mainly with others they know in real life.