Peer Effects in Product Adoption†

Michael Bailey, Drew Johnston, Theresa Kuchler, Johannes Stroebel, Arlene Wong

Research output: Contribution to journalArticlepeer-review

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.

Original languageEnglish (US)
Pages (from-to)488-526
Number of pages39
JournalAmerican Economic Journal: Applied Economics
Volume14
Issue number3
DOIs
StatePublished - 2022

All Science Journal Classification (ASJC) codes

  • Economics, Econometrics and Finance(all)

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