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Adoption with Social Learning and Network Externalities

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  • Marcel Fafchamps
  • Mans Soderbom
  • Monique vanden Boogaart

Abstract

Using a large administrate dataset covering the universe of phone calls and airtime transfers in a country over a four year period, we examine the pattern of adoption of airtime transfers over time. We start by documenting strong network effects: increased usage of the new airtime transfer service by social neighbors predicts a higher adoption probability. We then seek to narrow down the possible sources of these network effects by distinguishing between network externalities and social learning. Within social learning, we also seek to differentiate between learning about existence of the new product from learning about its quality or usefulness. We find robust evidence suggestive of social learning both for the existence and the quality of the product. In contrast, we find that network effects turn negative after first adoption, suggesting that airtime transfers are strategic substitutes among network neighbors.

Suggested Citation

  • Marcel Fafchamps & Mans Soderbom & Monique vanden Boogaart, 2016. "Adoption with Social Learning and Network Externalities," NBER Working Papers 22282, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:22282
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    References listed on IDEAS

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    Cited by:

    1. Ivan Rivadeneyra & Daniel D. Suthers & Ruben Juarez, 2022. "Mobile money networks with tax-incentives," Palgrave Communications, Palgrave Macmillan, vol. 9(1), pages 1-14, December.
    2. 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).
    3. 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.
    4. 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.
    5. 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.

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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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