Revisiting How Perceived Uncertainty and Herd Behavior Influence Technology Choice

Revisiting How Perceived Uncertainty and Herd Behavior Influence Technology Choice

Ali Vedadi (Middle Tennessee State University, USA) and Timothy H. Greer (Middle Tennessee State University, USA)
Copyright: © 2021 |Pages: 19
DOI: 10.4018/JOEUC.20211101.oa1
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Abstract

Understanding how herd behavior occurs in the information systems context is important because such behavior influences many choice decisions, is the reason for some decision anomalies, and explains the reasons behind the rise or collapse of technology trends. Perceived uncertainty is a critical factor that triggers herding, but despite its influential role, prior research has not adequately investigated this broad concept. This research contributes to the literature by decomposing perceived uncertainty to its dimensions and analyzing the influence of each one on triggering individuals’ herd behavior. Our findings show that unlike state uncertainty, only effect and response uncertainty are the triggers herd behavior.
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Introduction

People’s decisions are often not only determined by their own perceptions and information, but also by the behavior of those around them. The influence of others’ behavior is usually more significant in uncertain circumstances, which are characterized by complexity and information deficiency. Similarly, individuals often make information technology (IT) adoption decisions in complex and multidimensional settings, which could lead to certain behavioral anomalies. As technologies become increasingly advanced, the accurate evaluation of their functionalities may require a substantial amount of information and analysis, thus making choices difficult for most users. In uncertain circumstances, end users’ information about the technology options is most likely incomplete, and their understanding of the technology capabilities could be limited. The lack of enough information usually motivates users to find ways of coping with the resulting uncertainty (Banerjee, 1992). In such circumstances, observing other users’ decisions and learning about the popularity of alternatives could significantly influence users’ decision making. When uncertain about what to do, individuals may simply “follow the herd” and imitate others (Bikhchandani et al., 1992).

The widespread use of the Internet and various online social media platforms has made it convenient to observe other users’ decisions pertaining to the adoption of technologies and to assess how popular each technology is. The combination of perceived uncertainty and observing the behavior of other users may lead to the phenomenon of herd behavior, which is defined as the imitation of others’ behavior in uncertain circumstances (Banerjee, 1992). An instance of herd behavior can occur in online auctions, in which numerous buyers tend to bid for products that already have numerous bids while ignoring similar or more attractive products that do not have any bids (Wang et al., 2018)1.

Herd behavior is primarily comprised of two complementary cognitive mechanisms: 1) “discounting own information” (i.e., the degree to which one disregards personal beliefs about a technology when making an adoption decision), and 2) “imitating others” (i.e., the degree to which one follows previous adopters in choosing a certain form of technology) (Sun, 2013). Herd behavior theory explains that in uncertain circumstances, a reasonable strategy is to simply follow the herd instead of investing one’s own time and efforts in evaluating the alternatives. This approach is based on the premise that the current members of the herd have already made a careful assessment of alternatives and determined that a reasonable decision is to adopt the popular technology. Imitation has also been shown to be a popular IT strategy used by late-mover firms (Zhang & Ravishankar, 2019).

Although some previous information systems (IS) studies attempted to investigate how herd behavior occurs in the IS context, there are still important questions that need to be addressed, which is evidenced by surprising and mixed results in the literature. For instance, Sun (2013) found that perceived uncertainty about adopting a wiki technology and learning about its popularity did not directly cause individuals to imitate each other. The non-significant relationship between perceived uncertainty and imitation suggested that decision making was not a function of others’ behavior. Similarly, the findings of Vedadi and Warkentin (2020) showed that perceived uncertainty and imitation tendency were negatively correlated, indicating that the more uncertain individuals are, the less likely they are inclined to imitate. These findings, which are inconsistent with herd behavior theory, suggest that perceived uncertainty may not necessarily lead to imitation in technology adoption and that herd behavior in the IS context should be reconceptualized. Therefore, we aim to answer the following overarching research question:

  • How does perceived uncertainty lead to herd behavior in the choice of technology?

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