How Peer Influence Affects Attribute Preferences: A Bayesian Updating Mechanism
AbstractWe study how multiattribute product choices are affected by peer influence. We propose a two-stage conjoint-based approach to examine three behavioral mechanisms of peer influence. We find that when faced with information on peer choices, consumers update their attribute preferences in a Bayesian manner. This suggests that greater uncertainty in the attribute preferences of a focal consumer and lesser uncertainty in preferences of peers both lead to greater preference revision. Greater number of peers is associated with greater preference revision, although the extent of preference revision diminishes with increasing number of peers. Furthermore, to address the significant time and costs associated with collecting sociometric data, we estimate the accuracy of predicted consumer choices when peer influence data are unavailable. Online social network membership and frequency of peer interactions provide better proxies than more common demographic similarity measures. These findings have key implications, especially for word-of-mouth marketing.
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Bibliographic InfoArticle provided by INFORMS in its journal Marketing Science.
Volume (Year): 30 (2011)
Issue (Month): 2 (03-04)
preference revision; Bayesian updating; attribute preference uncertainty; social networks; social influence; conjoint analysis; Bayesian estimation;
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- Tiwari, Ashutosh & Richards, Timothy J., 2013. "Anonymous Social Networks versus Peer Networks in Restaurant Choice," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150467, Agricultural and Applied Economics Association.
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