Sequential Adoption Theory : A Theory for Understanding Herding Behavior in Early Adoption of Novel Technologies

Technology adoption often occurs sequentially, so that later potential adopters can see the decisions (adopt or not adopt) of earlier potential adopters. In this paper we review the literature on observational learning, in which people use information gained by observing the behavior of others to inform their decisions, and note that little prior research has used an observational learning perspective to understand the adoption of information technology. Based on theory and previous literature, we suggest that observational learning is likely to be common in adoption decisions. We develop a model that extends existing observational learning models and use simulation to test the model. The results suggest that following the behavior of other similarly-situated decision makers can be a very useful strategy in adoption situations in which there is a great deal of uncertainty. Implications for research and practice are discussed