The finding also offers an explanation for the mixed results reported in prior studies with regard to the influence of online user reviews on product sales. Our results validate informational cas- cades as an important driver for decision making on the Internet. The phenomenon persists after controlling for alternative explana- tions such as network effects, word-of-mouth effects, and product diffusion. Furthermore, we find that user reviews have no impact on user adoption of the most popular product, while having an increasingly positive impact on the adoption of lower ranking products. Our results demonstrate that online users' choices of software products exhibit distinct jumps and drops with changes in download ranking, as predicted by informational cascades theory. We find user behavior in adopting software products is consistent with the predictions of the informational cascades literature. In this paper, we empi- rically examine informational cascades in the context of online software adoption.

With easy availability of information about other users' choices, the Internet offers an ideal envi- ronment for informational cascades. Informational cascades are often rational for individual decision making however, it may lead to adoption of inferior products. An informa- tional cascade occurs when it is optimal for an online user, having observed others' actions, to follow the adoption deci- sion of the preceding individual without regard to his own information. Online users often need to make adoption decisions without accurate information about the product values.

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