Template-Type: ReDIF-Paper 1.0
Author-Name: Rhys Murrian
Author-Email: rhys.murrian@monash.edu
Author-Workplace-Name: Department of Economics and SoDa Labs, Monash University
Author-Name: Paul A. Raschky
Author-Email: paul.raschky@monash.edu
Author-Workplace-Name: Department of Economics and SoDa Labs, Monash University
Author-Name: Klaus Ackermann
Author-Email: klaus.ackermann@monash.edu
Author-Workplace-Name: Department of Econometrics and Business Statistics and SoDa Labs, Monash University 
Title: Friends, Key Players and the Adoption and Use of Experience Goods
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.
Creation-Date: 2024-09
File-URL: http://soda-wps.s3-website-ap-southeast-2.amazonaws.com/RePEc/ajr/sodwps/2024-03.pdf
File-Format: Application/pdf
Number: 2024-03
Classification-JEL: D12, Z13
Keywords: networks,  experience goods,  product adoption,  taste projection
Handle: RePEc:ajr:sodwps:2024-03