Identity Signaling with Social Capital: A Model of Symbolic Consumption

42 Pages Posted: 4 May 2011  

Jonah A. Berger

University of Pennsylvania - Marketing Department

Benjamin Ho

Cornell University - Samuel Curtis Johnson Graduate School of Management

Yogesh V. Joshi

University of Maryland - Department of Marketing

Multiple version iconThere are 2 versions of this paper

Date Written: April 15, 2011

Abstract

People consume not only physical goods but also social interaction, and consumer choices depend on both intrinsic motivations (preferences for consumption) and extrinsic motivations (how choices impact social interactions). In this paper, we study how social identity, preference, and utility from social interaction shape consumer behavior and choice in the marketplace. Our contribution is two-fold: first, we present a novel modeling framework that captures heterogeneity in the distribution of intrinsic preferences and social capital in a social network, and demonstrate how rational consumer choice driven by social utility influences the demand for goods. Second, we show how this framework can help explain why trends may emerge out of insular market segments, why some inconspicuous behaviors may become effective signals of identity, and why some very highly popular products may suddenly experience a loss in market interest. We discuss implications of such behaviors for product demand generation, innovation, and advertising.

Keywords: social identity, social influence, contagion, conspicuous consumption, fads, fashion, economic models, signaling models, game theory

JEL Classification: D11, D82, D85, M31

Suggested Citation

Berger, Jonah A. and Ho, Benjamin and Joshi, Yogesh V., Identity Signaling with Social Capital: A Model of Symbolic Consumption (April 15, 2011). Available at SSRN: https://ssrn.com/abstract=1828848 or http://dx.doi.org/10.2139/ssrn.1828848

Jonah A. Berger

University of Pennsylvania - Marketing Department ( email )

700 Jon M. Huntsman Hall
3730 Walnut Street
Philadelphia, PA 19104-6340
United States

Benjamin Ho

Cornell University - Samuel Curtis Johnson Graduate School of Management ( email )

Ithaca, NY 14853
United States

HOME PAGE: http://forum.johnson.cornell.edu/faculty/ho/

Yogesh V. Joshi (Contact Author)

University of Maryland - Department of Marketing ( email )

College Park, MD 20742
United States

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