Adoption with Social Learning and Network Externalities

45 Pages Posted: 24 May 2016 Last revised: 20 Nov 2021

See all articles by Marcel Fafchamps

Marcel Fafchamps

Stanford University - Freeman Spogli Institute for International Studies

Mans Soderbom

University of Gothenburg

Monique vanden Boogaart

Uber Technologies Inc.

Date Written: May 2016

Abstract

Using a large administrate dataset covering the universe of phone calls and airtime transfers in a country over a four year period, we examine the pattern of adoption of airtime transfers over time. We start by documenting strong network effects: increased usage of the new airtime transfer service by social neighbors predicts a higher adoption probability. We then seek to narrow down the possible sources of these network effects by distinguishing between network externalities and social learning. Within social learning, we also seek to differentiate between learning about existence of the new product from learning about its quality or usefulness. We find robust evidence suggestive of social learning both for the existence and the quality of the product. In contrast, we find that network effects turn negative after first adoption, suggesting that airtime transfers are strategic substitutes among network neighbors.

Suggested Citation

Fafchamps, Marcel and Soderbom, Mans and vanden Boogaart, Monique, Adoption with Social Learning and Network Externalities (May 2016). Available at SSRN: https://ssrn.com/abstract=2783196

Marcel Fafchamps (Contact Author)

Stanford University - Freeman Spogli Institute for International Studies ( email )

Stanford, CA 94305
United States

Mans Soderbom

University of Gothenburg ( email )

Viktoriagatan 30
Göteborg, 405 30
Sweden

Monique Vanden Boogaart

Uber Technologies Inc. ( email )

1455 Market St
San Francisco, CA 94103-1331
United States

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