Social Networks and New Product Choice

Influential individuals in a social network environment are important in shaping preferences for new products. In this study, we adopt an incentive compatible choice-based conjoint analysis approach to generate data on the introduction of a new ice cream product. We use spatial econometric methods to determine how individuals are likely to change their preferences when exposed to the choices of other members in their social network. We find evidence that agents look to others for guidance in their preference for subjective or taste-specific parameters, but rely on own preferences for objectively measured attributes such as price. We also use spatial methods to determine which network-member is the most influential. We find that the most connected member is not necessarily the most influential, and that influence can be determined econometrically.