Promoting Platform Takeoff and Self-Fulfilling Expectations: Field Experimental Evidence

Kevin Boudreau

No 28325, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The theoretical literature on platforms and network effects predicts that the initial growth and takeoff of a platform crucially depends on the market’s expectations of the future installed base. This paper tests this claim, reporting on a field experiment in which invitations to join a newly launched platform were sent to 16,349 individuals and included randomized statements regarding the future expected installed base (along with disclosures of the current installed base). I find evidence consistent with subjective expectations playing a crucial role in shaping early adoption and platform takeoff. Statements regarding expectations of the future installed base more significantly affected adoption than did disclosures of the current installed base. Statements of larger numbers of expected users caused more adoption than did smaller numbers. Statements of a smaller installed base of users (whether current or expected) led to lower demand than did stating nothing at all. The effect of stating subjective expectations by the platform became insignificant once the current installed base grew larger. The response of adoption to expected numbers of users reveals patterns consistent with the long-theorized chicken-and-egg problem and self-fulfilling expectations. The findings have significant implications for the effective promotion, marketing, and “evangelism” of new platform ventures.

JEL-codes: C93 D16 D26 D43 L1 L13 L86 (search for similar items in EconPapers)
Date: 2021-01
New Economics Papers: this item is included in nep-exp and nep-ind
Note: IO PR
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Citations: View citations in EconPapers (2)

Published as Kevin J. Boudreau, 2021. "Promoting Platform Takeoff and Self-Fulfilling Expectations: Field Experimental Evidence," Management Science, vol 67(9), pages 5953-5967.

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