Social information use in songbird habitat selection commonly involves a conspecific attraction strategy. Individuals copy the breeding‐site choices of conspecifics, that is, bias their own settlement decisions towards sites (tracts of spatially limited habitat with similar structure) already occupied by others. In order to be adaptive, social information use has to be discriminative. Especially the decisions of good quality individuals, i.e. measuring high at observable fitness correlates, should be copied more frequently than those of poor quality individuals. It is unknown, however, whether songbirds discriminatively use conspecific presence by evaluating the quality of information providers in habitat selection. We experimentally tested whether wood warblers Phylloscopus sibilatrix selectively copied settlement decisions of conspecifics in relation to the quality of observed individuals. We also tested whether the use of social cues was influenced by the population density at a particular site in the preceding year. We found that wood warblers selectively used intraspecific social information, but in a pattern opposite to that expected based on existing hypotheses. Wood warblers copied breeding‐site choices of poor quality conspecifics and despite temporary attraction to sites where the presence of good quality individuals was simulated, they did not ultimately settle near these individuals. Population density in the preceding year did not influence settlement patterns. We argue that when making settlement decisions, wood warblers assessed the expected level of local intraspecific competition and selectively copied breeding‐site choices of conspecifics or refused to settle, depending on competitive abilities of observed individuals. This adds a novel aspect to the patterns and processes of social information use proposed thus far, and provides support for the predicted negative effect of intraspecific competition on benefit of information. Moreover, it seems that habitat selection in wood warblers is a complex decision‐making process, in which initial decisions are adjusted after acquiring more accurate information.SynthesisSocial information use in songbird habitat selection commonly involves copying the breeding‐site choices of conspecifics (so‐called conspecific attraction). To be adaptive, this strategy has to be discriminative, but almost no empirical studies have tested this assertion. Our study shows that birds may selectively use social information by copying settlement decisions of poor quality conspecifics, but avoid settling near good quality individuals, likely because of their high competitive abilities. This decision‐making pattern supports the predicted, yet not experimentally tested, tradeoff between information value and cost of competition in social information use. Our study highlights also that the use of social cues in settlement decisions may be both positively and negatively biased.