Drew M. Johnston
NYU Stern School of Business
44 West 4th Street
Institutional Affiliation: New York University
NBER Working Papers and Publications
|May 2019||Peer Effects in Product Adoption|
with Michael Bailey, Theresa Kuchler, Johannes Stroebel, Arlene Wong: w25843
We study the nature of peer effects in the market for new cell phones. Our analysis builds on de-identified data from Facebook that combine information on social networks with information on users' cell phone models. To identify peer effects, we use variation in friends' new phone acquisitions resulting from random phone losses and carrier-specific contract terms. A new phone purchase by a friend has a substantial positive and long-term effect on an individual's own demand for phones of the same brand, most of which is concentrated on the particular model purchased by the friend. We provide evidence that social learning contributes substantially to the observed peer effects. While peer effects increase the overall demand for cell phones, a friend's purchase of a new phone of a particular ...