Selection Effects in Online Sharing: Consequences for Peer Adoption
Sean J. Taylor
New York University (NYU) - Leonard N. Stern School of Business
Massachusetts Institute of Technology (MIT) - Sloan School of Management
April 30, 2013
14th ACM Conference on Electronic Commerce, June 16-20, 2013, University of Pennsylvania, Philadelphia PA
Most models of social contagion take peer exposure to be a corollary of adoption, yet in many settings, the visibility of one's adoption behavior happens through a separate decision process. In online systems, product designers can define how peer exposure mechanisms work: adoption behaviors can be shared in a passive, automatic fashion, or occur through explicit, active sharing. The consequences of these mechanisms are of substantial practical and theoretical interest: passive sharing may increase total peer exposure but active sharing may expose higher quality products to peers who are more likely to adopt.
We examine selection effects in online sharing through a large-scale field experiment on Facebook that randomizes whether or not adopters share Offers (coupons) in a passive manner. We derive and estimate a joint discrete choice model of adopters' sharing decisions and their peers' adoption decisions. Our results show that active sharing enables a selection effect that exposes peers who are more likely to adopt than the population exposed under passive sharing. We decompose the selection effect into two distinct mechanisms: active sharers expose peers to higher quality products, and the peers they share with are more likely to adopt independently of product quality. Simulation results show that the user-level mechanism comprises the bulk of the selection effect. The study's findings are among the first to address downstream peer effects induced by online sharing mechanisms, and can inform design in settings where a surplus of sharing could be viewed as costly.
Number of Pages in PDF File: 16
Keywords: experimentation, viral marketing, information diffusion, social advertising, econometrics
Date posted: May 2, 2013 ; Last revised: August 22, 2014
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