Herding in Mobile Payment: Evidence, Mechanism, and Heterogeneity

Abstract Using a proprietary data set containing nearly 20 million transactions over one and a half years from hundreds of grocery stores, we find evidence of herding among consumers in the use of mobile payment, that is, consumers are more likely to use mobile payment when any previous transaction within 1 min is paid with mobile. The effect of herding is stronger when consumers observe more mobile payment usage within a minute. Further, we find that irrational herding (mimicry) drives the observed herding behavior. Finally, we find that consumers’ price sensitivity and experience in mobile payment mitigate their herding, but the direct network effect does not affect herding.