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Social learning with differentiated products

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  • Arthur Campbell

Abstract

Learning from friends is a key process by which consumers acquire information about available products. This article embeds social learning in a model of firms producing differentiated products. I consider how the structure of social relationships between consumers influences pricing and welfare. In particular, how a variety of characteristics of social networks ‐ distribution of friendships, homophily, clustering, and correlations between an individual's preferences and number of friends ‐ influence these outcomes. I also find conditions under which consumer awareness and the sensitivity of demand to prices are useful measures of the informational efficiency of markets.

Suggested Citation

  • Arthur Campbell, 2019. "Social learning with differentiated products," RAND Journal of Economics, RAND Corporation, vol. 50(1), pages 226-248, March.
    • Handle: RePEc:bla:randje:v:50:y:2019:i:1:p:226-248
    DOI: 10.1111/1756-2171.12268
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    Cited by:

    1. Carin Cruijsen & Joris Knoben, 2021. "Ctrl+C Ctrl+Pay: Do People Mirror Electronic Payment Behavior of their Peers?," Journal of Financial Services Research, Springer;Western Finance Association, vol. 59(1), pages 69-96, April.
    2. Arthur Campbell & C. Matthew Leister & Yves Zenou, 2020. "Word‐of‐mouth communication and search," RAND Journal of Economics, RAND Corporation, vol. 51(3), pages 676-712, September.

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