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A Dyad Model of Calling Behaviour with Tie Strength Dynamics

47 Pages Posted: 4 Oct 2009 Last revised: 13 Oct 2009

Mengze Shi

University of Toronto - Rotman School of Management

Botao Yang

University of Southern California - Marshall School of Business

Jeongwen Chiang

Hong Kong University of Science & Technology (HKUST) - Department of Marketing

Date Written: September 30, 2009

Abstract

This paper investigates the dynamic relation between callers' social ties and their wireless phone service consumption. We construct a large pair-level panel dataset with information on the number of each pair's common contacts, calling activities, prices, and each caller's characteristics over a one-year time period. We estimate a dynamic model that encapsulates the evolving relationship between each pair of consumers. We find the amount of communications between a pair of consumers increases with the strength of their tie, which is higher when these two consumers share more common contacts. Our results support the reciprocity rule in telephone calls, i.e. when individual A initiates more (less) phone calls to individual B in one month, their social tie will be strengthened (weakened) and individual B will make more (less) calls to individual A in the subsequent months. We demonstrate the implications of our results in evaluating the return of temporary price promotions and designing price plans. Our results underscore the importance of incorporating social network characteristics in the study of telecommunications markets.

Keywords: Social Network, Tie-strength, Reciprocity, Wireless Phone Service

Suggested Citation

Shi, Mengze and Yang, Botao and Chiang, Jeongwen, A Dyad Model of Calling Behaviour with Tie Strength Dynamics (September 30, 2009). NET Institute Working Paper No. 09-12. Available at SSRN: https://ssrn.com/abstract=1480334 or http://dx.doi.org/10.2139/ssrn.1480334

Mengze Shi (Contact Author)

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

Botao Yang

University of Southern California - Marshall School of Business ( email )

3660 Trousdale Parkway, ACC 306E
Department of Marketing
Los Angeles, CA 90089-0443
United States

Jeongwen Chiang

Hong Kong University of Science & Technology (HKUST) - Department of Marketing ( email )

Department of Marketing
Clear Water Bay, Kowloon
Hong Kong

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