IDEAS home Printed from https://ideas.repec.org/a/bpj/fhecpo/v22y2019i1p13n1.html
   My bibliography  Save this article

Modeling Product Choices in a Peer Network

Author

Listed:
  • Fang Di

    (University of Arkansas, Department of Agricultural Economics and Agribusiness, Fayetteville, AR, USA)

  • Richards Timothy J.

    (Marvin and June Morrison Chair of Agribusiness, Morrison School of Agribusiness, W. P. Carey School of Business, Arizona State University, 7231 E. Sonoran Arroyo Mall, Mesa, AZ 85212, USA)

  • Grebitus Carola

    (Associate Professor of Food Industry Management, W. P. Carey School of Business, Arizona State University, 7231 E. Sonoran Arroyo Mall, Mesa, AZ 85212, USA)

Abstract

Consumers are uncertain about their preferences for innovative product attributes until the first trial. They search for information as a means of reducing uncertainty and improving the likelihood that they will be satisfied with their purchase. One way to receive information is through peer networks. As a peer network is often a priori unknown, we conduct an experiment to solicit self-reported peer nominations. We compare two mechanisms through which peer networks operate: Strength of social ties and perceived peer expertise, to draw inferences regarding consumers’ preference reversal after exposure to peer recommendations. Our results indicate that perceived source expertise influences preferences while the closeness of social relationships has no statistically significant impact.

Suggested Citation

  • Fang Di & Richards Timothy J. & Grebitus Carola, 2019. "Modeling Product Choices in a Peer Network," Forum for Health Economics & Policy, De Gruyter, vol. 22(1), pages 1-13, June.
    • Handle: RePEc:bpj:fhecpo:v:22:y:2019:i:1:p:13:n:1
    DOI: 10.1515/fhep-2018-0007
    as

    Download full text from publisher

    File URL: https://doi.org/10.1515/fhep-2018-0007
    Download Restriction: For access to full text, subscription to the journal or payment for the individual article is required.
    File URL: https://libkey.io/10.1515/fhep-2018-0007?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Millo, Giovanni & Piras, Gianfranco, 2012. "splm: Spatial Panel Data Models in R," Journal of Statistical Software, Foundation for Open Access Statistics, vol. 47(i01).
    2. Charles F. Manski, 1993. "Identification of Endogenous Social Effects: The Reflection Problem," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 60(3), pages 531-542.
    3. David A. Reinstein & Christopher M. Snyder, 2005. "The Influence Of Expert Reviews On Consumer Demand For Experience Goods: A Case Study Of Movie Critics," Journal of Industrial Economics, Wiley Blackwell, vol. 53(1), pages 27-51, March.
    4. Vishal Narayan & Vithala R. Rao & Carolyne Saunders, 2011. "How Peer Influence Affects Attribute Preferences: A Bayesian Updating Mechanism," Marketing Science, INFORMS, vol. 30(2), pages 368-384, 03-04.
    5. D. Harrison McKnight & Vivek Choudhury & Charles Kacmar, 2002. "Developing and Validating Trust Measures for e-Commerce: An Integrative Typology," Information Systems Research, INFORMS, vol. 13(3), pages 334-359, September.
    6. Bruce Sacerdote, 2001. "Peer Effects with Random Assignment: Results for Dartmouth Roommates," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 116(2), pages 681-704.
    7. Jason M. Fletcher & Olga Yakusheva, 2016. "Peer Effects on Teenage Fertility: Social Transmission Mechanisms and Policy Recommendations," American Journal of Health Economics, University of Chicago Press, vol. 2(3), pages 300-317, Summer.
    8. Stephen B. Billings & David J. Deming & Stephen L. Ross, 2016. "Partners in Crime: Schools, Neighborhoods and the Formation of Criminal Networks," NBER Working Papers 21962, National Bureau of Economic Research, Inc.
    9. De Bruyn, Arnaud & Lilien, Gary L., 2008. "A multi-stage model of word-of-mouth influence through viral marketing," International Journal of Research in Marketing, Elsevier, vol. 25(3), pages 151-163.
    10. David Godes & Dina Mayzlin, 2004. "Using Online Conversations to Study Word-of-Mouth Communication," Marketing Science, INFORMS, vol. 23(4), pages 545-560, June.
    11. David Godes & Dina Mayzlin, 2009. "Firm-Created Word-of-Mouth Communication: Evidence from a Field Test," Marketing Science, INFORMS, vol. 28(4), pages 721-739, 07-08.
    12. Michael Kremer & Dan Levy, 2008. "Peer Effects and Alcohol Use among College Students," Journal of Economic Perspectives, American Economic Association, vol. 22(3), pages 189-206, Summer.
    13. Esther Duflo & Emmanuel Saez, 2003. "The Role of Information and Social Interactions in Retirement Plan Decisions: Evidence from a Randomized Experiment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 118(3), pages 815-842.
    14. Mary Beth Pinto & Arpan Yagnik, 2017. "Fit for life: A content analysis of fitness tracker brands use of Facebook in social media marketing," Journal of Brand Management, Palgrave Macmillan, vol. 24(1), pages 49-67, January.
    15. Duflo, Esther & Saez, Emmanuel, 2002. "Participation and investment decisions in a retirement plan: the influence of colleagues' choices," Journal of Public Economics, Elsevier, vol. 85(1), pages 121-148, July.
    16. Alejandro Gaviria & Steven Raphael, 2001. "School-Based Peer Effects And Juvenile Behavior," The Review of Economics and Statistics, MIT Press, vol. 83(2), pages 257-268, May.
    17. Ray Reagans, 2005. "Preferences, Identity, and Competition: Predicting Tie Strength from Demographic Data," Management Science, INFORMS, vol. 51(9), pages 1374-1383, September.
    18. Anselin, Luc, 2002. "Under the hood : Issues in the specification and interpretation of spatial regression models," Agricultural Economics, Blackwell, vol. 27(3), pages 247-267, November.
    19. Enrico Moretti, 2011. "Social Learning and Peer Effects in Consumption: Evidence from Movie Sales," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 78(1), pages 356-393.
    20. Lin, Xu, 2014. "Peer effects in adolescents' delinquent behaviors: Evidence from a binary choice network model," Regional Science and Urban Economics, Elsevier, vol. 46(C), pages 73-92.
    21. Laura K. Gee & Jason Jones & Moira Burke, 2017. "Social Networks and Labor Markets: How Strong Ties Relate to Job Finding on Facebook’s Social Network," Journal of Labor Economics, University of Chicago Press, vol. 35(2), pages 485-518.
    22. Daniel Z. Levin & Rob Cross, 2004. "The Strength of Weak Ties You Can Trust: The Mediating Role of Trust in Effective Knowledge Transfer," Management Science, INFORMS, vol. 50(11), pages 1477-1490, November.
    23. Brown, Jacqueline Johnson & Reingen, Peter H, 1987. "Social Ties and Word-of-Mouth Referral Behavior," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 14(3), pages 350-362, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ashutosh Tiwari & Timothy J. Richards, 2016. "Social Networks and Restaurant Ratings," Agribusiness, John Wiley & Sons, Ltd., vol. 32(2), pages 153-174, April.
    2. 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.
    3. Richards, Timothy J. & Tiwari, Ashutosh, 2014. "Social Networks and Restaurant Choice," 2014 AAEA/EAAE/CAES Joint Symposium: Social Networks, Social Media and the Economics of Food, May 29-30, 2014, Montreal, Canada 166112, Agricultural and Applied Economics Association.
    4. Wu, Lingling & Zhang, Junyi & Chikaraishi, Makoto, 2013. "Representing the influence of multiple social interactions on monthly tourism participation behavior," Tourism Management, Elsevier, vol. 36(C), pages 480-489.
    5. Sarigul, Sercan & Rui, Huaxia, 2014. "Nowcasting Obesity in the U.S. Using Google Search Volume Data," 2014 AAEA/EAAE/CAES Joint Symposium: Social Networks, Social Media and the Economics of Food, May 29-30, 2014, Montreal, Canada 166113, Agricultural and Applied Economics Association.
    6. Peter Kooreman, 2007. "Time, money, peers, and parents; some data and theories on teenage behavior," Journal of Population Economics, Springer;European Society for Population Economics, vol. 20(1), pages 9-33, February.
    7. Ana Balsa & Carlos Díaz, 2018. "Social interactions in health behaviors and conditions," Documentos de Trabajo/Working Papers 1802, Facultad de Ciencias Empresariales y Economia. Universidad de Montevideo..
    8. Josh Lerner & Ulrike Malmendier, 2013. "With a Little Help from My (Random) Friends: Success and Failure in Post-Business School Entrepreneurship," Review of Financial Studies, Society for Financial Studies, vol. 26(10), pages 2411-2452.
    9. Deconinck, Koen & Swinnen, Johan, 2015. "Peer effects and the rise of beer in Russia," Food Policy, Elsevier, vol. 51(C), pages 83-96.
    10. Gordon B. Dahl & Katrine V. L?ken & Magne Mogstad, 2014. "Peer Effects in Program Participation," American Economic Review, American Economic Association, vol. 104(7), pages 2049-2074, July.
    11. Florian Probst & Laura Grosswiele & Regina Pfleger, 2013. "Who will lead and who will follow: Identifying Influential Users in Online Social Networks," Business & Information Systems Engineering: The International Journal of WIRTSCHAFTSINFORMATIK, Springer;Gesellschaft für Informatik e.V. (GI), vol. 5(3), pages 179-193, June.
    12. Zhang, Hongliang, 2016. "The role of testing noise in the estimation of achievement-based peer effects," Economics of Education Review, Elsevier, vol. 54(C), pages 113-123.
    13. Kick, Markus, 2015. "Social Media Research: A Narrative Review," EconStor Preprints 182506, ZBW - Leibniz Information Centre for Economics.
    14. Xu Lin, 2015. "Utilizing spatial autoregressive models to identify peer effects among adolescents," Empirical Economics, Springer, vol. 49(3), pages 929-960, November.
    15. Koen Deconinck & Jo Swinnen, 2012. "Peer Effects in Alcohol Consumption: Evidence from Russia’s Beer Boom," LICOS Discussion Papers 31612, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
    16. Chong (Alex) Wang & Xiaoquan (Michael) Zhang & Il-Horn Hann, 2018. "Socially Nudged: A Quasi-Experimental Study of Friends’ Social Influence in Online Product Ratings," Information Systems Research, INFORMS, vol. 29(3), pages 641-655, September.
    17. Fishman, Arthur & Fishman, Ram & Gneezy, Uri, 2019. "A tale of two food stands: Observational learning in the field," Journal of Economic Behavior & Organization, Elsevier, vol. 159(C), pages 101-108.
    18. Bet Caeyers, 2014. "Peer effects in development programme awareness of vulnerable groups in rural Tanzania," CSAE Working Paper Series 2014-11, Centre for the Study of African Economies, University of Oxford.
    19. Yakusheva, Olga & Kapinos, Kandice & Weiss, Marianne, 2011. "Peer effects and the Freshman 15: Evidence from a natural experiment," Economics & Human Biology, Elsevier, vol. 9(2), pages 119-132, March.
    20. Kang, Changhui, 2007. "Classroom peer effects and academic achievement: Quasi-randomization evidence from South Korea," Journal of Urban Economics, Elsevier, vol. 61(3), pages 458-495, May.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bpj:fhecpo:v:22:y:2019:i:1:p:13:n:1. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: https://www.degruyter.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.