Is Oprah Contagious? Identifying Demand Spillovers in Product Networks

Eyal Carmi (), Gal OEstreicher-Singer () and Arun Sundararajan ()
Additional contact information
Eyal Carmi: Tel Aviv University
Gal OEstreicher-Singer: Tel Aviv University
Arun Sundararajan: New York University, http://oz.stern.nyu.edu

No 10-18, Working Papers from NET Institute

Abstract: We study the online contagion of exogenous demand shocks generated by book reviews featured on the Oprah Winfrey TV show and published in the New York Times, through the co-purchase recommendation network on Amazon.com. These exogenous events may ripple through and affect the demand for a “network” of related books that were not explicitly mentioned in a review but were located “close” to reviewed books in this network. Using a difference-in-differences matched-sample approach, we identify the extent of the variations caused by the visibility of the online network and distinguish this effect from variation caused by hidden product complementarities. Our results show that the demand shock diffuses to books that are up to five links away from the reviewed book, and that this diffused shock persists for a substantial number of days, although the depth and the magnitude of diffusion varies widely across books at the same network distance from the focal product. We then analyze how product characteristics, assortative mixing and local network structure, play a role in explaining this variation in the depth and persistence of the contagion. Specifically, more clustered local networks “trap” the diffused demand shocks and cause it to be more intense and of a greater duration but restrict the distance of its spread, while less clustered networks lead to wider contagion of a lower magnitude and duration. Our results provide new evidence of the interplay between a firm’s online and offline media strategies and we contribute methods for modeling and analyzing contagion in networks.

Keywords: networks; product networks; electronic commerce; ecommerce; recommender systems; identification; exogenous shocks (search for similar items in EconPapers)
JEL-codes: L11 L81 M15 M31 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2010-09
New Economics Papers: this item is included in nep-cul, nep-mkt, nep-net, nep-soc and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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