A Dynamic Model of User Behavior in a Social Network Site

32 Pages Posted: 17 Apr 2010

See all articles by Dae-Yong Ahn

Dae-Yong Ahn

Chung-Ang University

Randal Watson

University of Texas at Austin - Department of Economics

Date Written: April 16, 2010

Abstract

This paper estimates a dynamic model of user behavior in a social network site using unique data on the daily login activity of a sample of members of MySpace.com. We view a social network as a stock of capital that yields a flow of utilities over time by creating interactions between the site user and her friends. This capital stock can be maintained and expanded by logging in to the site and communicating with other members. The user's login decision is thus a forward-looking one, which we model in the framework of a dynamic discrete-choice model. We allow for two sources of persistence in members' login decisions: state dependence and unobserved heterogeneity. We found two distinct types of consumers as regards utility, cost, and state transition. Across types, real-time chat and messaging, features of MySpace.com, positively affect the usage decision. We use our parameter estimates to perform counterfactual simulations with the goal of providing site managers with ways to enhance firm performance.

Keywords: Dynamic Discrete Choice, Online Social Networks, Unobserved Heterogeneity

JEL Classification: M31

Suggested Citation

Ahn, Dae-Yong and Watson, Randal, A Dynamic Model of User Behavior in a Social Network Site (April 16, 2010). Available at SSRN: https://ssrn.com/abstract=1591102 or http://dx.doi.org/10.2139/ssrn.1591102

Dae-Yong Ahn (Contact Author)

Chung-Ang University ( email )

221 Heuksuk-dong
Dongjak-gu
Seoul, 156-756
Korea, Republic of (South Korea)

Randal Watson

University of Texas at Austin - Department of Economics ( email )

Austin, TX 78712
United States

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