How Peer Influence Affects Attribute Preferences: A Bayesian Updating Mechanism

Vishal Narayan (), Vithala R. Rao () and Carolyne Saunders ()
Additional contact information
Vishal Narayan: Johnson Graduate School of Management, Cornell University, Ithaca, New York 14853
Vithala R. Rao: Johnson Graduate School of Management, Cornell University, Ithaca, New York 14853
Carolyne Saunders: Johnson Graduate School of Management, Cornell University, Ithaca, New York 14853

Marketing Science, 2011, vol. 30, issue 2, 368-384

Abstract: We study how multiattribute product choices are affected by peer influence. We propose a two-stage conjoint-based approach to examine three behavioral mechanisms of peer influence. We find that when faced with information on peer choices, consumers update their attribute preferences in a Bayesian manner. This suggests that greater uncertainty in the attribute preferences of a focal consumer and lesser uncertainty in preferences of peers both lead to greater preference revision. Greater number of peers is associated with greater preference revision, although the extent of preference revision diminishes with increasing number of peers. Furthermore, to address the significant time and costs associated with collecting sociometric data, we estimate the accuracy of predicted consumer choices when peer influence data are unavailable. Online social network membership and frequency of peer interactions provide better proxies than more common demographic similarity measures. These findings have key implications, especially for word-of-mouth marketing.

Keywords: preference revision; Bayesian updating; attribute preference uncertainty; social networks; social influence; conjoint analysis; Bayesian estimation (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (33)

Downloads: (external link)
http://dx.doi.org/10.1287/mksc.1100.0618 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:inm:ormksc:v:30:y:2011:i:2:p:368-384

Access Statistics for this article

More articles in Marketing Science from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().