Learning from Your Friends’ Check-Ins: An Empirical Study of Location-Based Social Networks

Recently, mobile applications have offered users the option to share their location information with friends. Using data from a major location-based social networking application in China (a Foursquare-like application), we estimate a structural model of restaurant discovery and observational learning. The unique feature of repeated customer visits in the data allows us to examine observational learning in both trial and repeat, and separate it from non-informational confounding mechanisms, such as normative conformity and homophily, using a novel test based on the structural model. The empirical evidence supports a strong observational learning effect and insignificant non-informational mechanisms. We also find that the moderating role of geographical locations on observational learning is critical in location-based social networks. These findings suggest a nuanced view for local merchants to boost observational learning with the advancement of location-based technology.