Friends, Key Players and the Adoption and Use of Experience Goods

Rhys Murrian (), Paul Raschky and Klaus Ackermann ()
Additional contact information
Rhys Murrian: Department of Economics and SoDa Labs, Monash University
Klaus Ackermann: Department of Econometrics and Business Statistics and SoDa Labs, Monash University

No 2024-03, SoDa Laboratories Working Paper Series from Monash University, SoDa Laboratories

Abstract: This paper empirically investigates how an individual’s network influences their purchase and subsequent use of experience goods. Utilising data on the network and game-ownership of over 108 million users from the world’s largest video game platform, we analyse whether a user’s friendship network influences their decision to purchase single-player video games. Our identification strategy uses an instrumental variable (IV) approach that employs the temporal lag of purchasing decisions from second degree friends. We find strong peer effects in the individual game adoption in the contemporary week. The effect is stronger if the friend who purchased the game is an old friend compared to a key player in the friendship network. Comparing the results to adoption decisions for a major label game, we find peer effects of a similar size and duration. However, the time subsequently spent playing the games is higher for players who were neither influenced by a peer who is a key player nor an old friend. Considering the increasing importance of online networks on consumption decisions, our findings offer some first insights on the heterogeneity of peer effects between old and key player friends and also provide evidence in consumers' biases in social learning.

Keywords: networks; experience goods; product adoption; taste projection (search for similar items in EconPapers)
JEL-codes: D12 Z13 (search for similar items in EconPapers)
Date: 2024-09
New Economics Papers: this item is included in nep-ipr, nep-net, nep-soc, nep-spo and nep-ure
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Related works:
Working Paper: Friends, Key Players and the Adoption and Use of Experience Goods (2024)
Working Paper: Friends, Key Players and the Adoption and Use of Experience Goods (2024)
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