Peer Effects in Product Adoption
- (pp. 488-526)
Abstract
We use de-identified data from Facebook to study the nature of peer effects in the market for cell phones. To identify peer effects, we exploit variation in friends' new phone acquisitions resulting from random phone losses. A new phone purchase by a friend has a large and persistent effect on an individual's own demand for phones of the same brand. While peer effects increase the overall demand for phones, a friend's purchase of a particular phone brand can reduce an individual's own demand for phones from competing brands, in particular if they are running on a different operating system.Citation
Bailey, Michael, Drew Johnston, Theresa Kuchler, Johannes Stroebel, and Arlene Wong. 2022. "Peer Effects in Product Adoption." American Economic Journal: Applied Economics, 14 (3): 488-526. DOI: 10.1257/app.20200367Additional Materials
JEL Classification
- C45 Neural Networks and Related Topics
- D12 Consumer Economics: Empirical Analysis
- L63 Microelectronics; Computers; Communications Equipment
- M31 Marketing
- Z13 Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification
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