The Emergence of Opinion Leaders in Social Networks

50 Pages Posted: 9 Jul 2008

See all articles by Vincent Mak

Vincent Mak

University of Cambridge - Cambridge Judge Business School

Date Written: July 5, 2008

Abstract

A major challenge in many word-of-mouth marketing campaigns is the cost-effective identification of opinion leaders, consumers who exert disproportionate influence on the purchase decisions of other consumers. However, empirical studies agree on few consumer characteristics that are strong predictors of opinion leadership. In the present research, we attempt to explain these null or weak findings through a game-theoretic perspective on opinion leader-follower relationships. Our model combines social network, word-of-mouth communication, consumer heterogeneity, and time preference in a setting in which each consumer makes once-in-a-lifetime choice between a new product and an outside option. We find that: (a) opinion leaders emerge in equilibrium whenever certain general conditions are met; (b) counter-intuitively, the most "patient" consumer with the highest time discount factor may become an opinion leader; and (c) equilibria in which opinion leaders are highly-connected and/or have low time discount factors may be neither efficient to consumers nor profit-maximizing to firms, even though they are likely to be focal outcomes.

Keywords: Word of mouth, opinion leaders, social networks, new-product diffusion models, game theory, consumer behavior

JEL Classification: C72, D83, M31

Suggested Citation

Mak, Vincent, The Emergence of Opinion Leaders in Social Networks (July 5, 2008). Available at SSRN: https://ssrn.com/abstract=1157285 or http://dx.doi.org/10.2139/ssrn.1157285

Vincent Mak (Contact Author)

University of Cambridge - Cambridge Judge Business School ( email )

Trumpington Street
Cambridge, CB2 1AG
United Kingdom
+44 (0)1223 764295 (Phone)
+44 (0)1223 339701 (Fax)

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