Title

Peer Effects in Product Adoption

Author(s)

Michael Bailey Michael Bailey (Facebook)

Drew Johnston Drew Johnston (Harvard University)

Theresa Kuchler Theresa Kuchler (New York University)

Johannes Stroebel Johannes Stroebel (New York University)

Arlene Wong Arlene Wong (Princeton University)

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.

Creation Date

2021-01

Section URL ID

Paper Number

2021-66

URL

https://pages.stern.nyu.edu/~jstroebe/PDF/BJKSW_PeerEffectsProductAdoption.pdf

File Function

Jel

L1, L2, M3, D4

Keyword(s)

Peer Effects, Demand Spillovers, Social Learning

Suppress

false

Series

13