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Adoption with Social Learning and Network Externalities

Listed author(s):
  • Marcel Fafchamps
  • Mans Soderbom
  • Monique vanden Boogaart

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.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 22282.

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Date of creation: May 2016
Handle: RePEc:nbr:nberwo:22282
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  1. William Jack & Tavneet Suri, 2014. "Risk Sharing and Transactions Costs: Evidence from Kenya's Mobile Money Revolution," American Economic Review, American Economic Association, vol. 104(1), pages 183-223, January.
  2. Jenny C. Aker, 2010. "Information from Markets Near and Far: Mobile Phones and Agricultural Markets in Niger," American Economic Journal: Applied Economics, American Economic Association, vol. 2(3), pages 46-59, July.
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