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Adoption with Social Learning and Network Externalities

Author

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  • Marcel Fafchamps
  • Måns Söderbom
  • Monique van den Boogart

Abstract

We examine patterns of adoption of a new airtime transfer service over time. We document a strong positive correlation between own adoption and increased usage of the new airtime transfer platform by social neighbours. We examine the possible sources of this correlation by distinguishing between network externalities that extend after adoption and social learning that stops after adoption. We find no correlation between usage by social neighbours and own usage after first adoption. We conclude that social learning about the existence and quality of a new product platform are important mechanisms in its diffusion.

Suggested Citation

  • Marcel Fafchamps & Måns Söderbom & Monique van den Boogart, 2022. "Adoption with Social Learning and Network Externalities," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 84(6), pages 1259-1282, December.
    • Handle: RePEc:bla:obuest:v:84:y:2022:i:6:p:1259-1282
    DOI: 10.1111/obes.12491
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    Cited by:

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    2. Cátia Batista & Marcel Fafchamps & Pedro C. Vicente, 2018. "Keep It Simple: A Field Experiment on Information Sharing in Social Networks," NBER Working Papers 24908, National Bureau of Economic Research, Inc.
    3. Insler, Michael & Rahman, Ahmed S. & Smith, Katherine, 2021. "Tracking the Herd with a Shotgun — Why Do Peers Influence College Major Selection?," IZA Discussion Papers 14412, Institute of Labor Economics (IZA).
    4. Christopher B. Barrett & Asad Islam & Abdul Mohammad Malek & Debayan Pakrashi & Ummul Ruthbah, 2022. "Experimental Evidence on Adoption and Impact of the System of Rice Intensification," American Journal of Agricultural Economics, John Wiley & Sons, vol. 104(1), pages 4-32, January.
    5. Mina Ameri & Elisabeth Honka & Ying Xie, 2019. "Word of Mouth, Observed Adoptions, and Anime-Watching Decisions: The Role of the Personal vs. the Community Network," Marketing Science, INFORMS, vol. 38(4), pages 567-583, July.

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    More about this item

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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