The Value of Platform Endorsement

Many digital platforms with large product assortments endorse a selected group of items to facilitate user choice. While it is intuitive that endorsed items may enjoy considerable benefits from increased sales, little is known about the effect of such platform endorsement on unendorsed items and on the platform. Using data from a field experiment conducted on an online freelance platform, we examine the effect of platform endorsement on user search and purchase behavior. We find that platform endorsement leads to an increase in search and purchases not only for endorsed services but also for unendorsed services. We find that this increase in search and purchases is mainly driven by an increase in overall quality perception of the services offered on the platform. We further explore heterogeneity in the effect of platform endorsement and find that the effect of platform endorsement on purchase is more pronounced for users with a higher propensity to purchase. We discuss implications for platforms, merchants, and regulators