A Model of Tie Formation, Product Adoption, and Content Generation

52 Pages Posted: 26 Jun 2017 Last revised: 15 Jan 2019

See all articles by Mina Ameri

Mina Ameri

University of Pittsburgh - University of Pittsburgh, Katz Graduate School of Business, Students; University of Texas at Dallas

Elisabeth Honka

University of California, Los Angeles (UCLA) - Anderson School of Management

Ying Xie

University of Texas at Dallas

Date Written: January 14, 2019

Abstract

We study the co-evolution of individual users' friendship tie formations and their concurrent online activities (product adoptions and content generation) within an evolving online social network. By explicitly modeling the endogenous formation of the network and accounting for the interdependence between decisions in friendship formations and in concurrent online activities, we are able to discover important drivers underlying individuals' friendship decisions and, at the same time, to provide a clean identification of the resulting peer effects on individuals' actions. We estimate our model using a novel data set capturing the continuous development of a network and users' entire action histories within the network. Our results reveal that the total number of friends and the number of common friends a potential friend has with the focal user are the most important drivers of friendship formation. Further, while having more friends does not necessarily make a user more active, having more active friends does increase a user's activity levels in product adoptions and content generation through peer and spill-over effects. We assess the effectiveness of various seeding and stimulation strategies in increasing website traffic through prediction exercises. We find that seeding to users with the most friends is not always the best strategy to increase users' activity levels in an evolving network.

Keywords: Social Network Formation, Peer Effects, Product Adoption, User-Generated Content

JEL Classification: D83, L82, M31

Suggested Citation

Ameri, Mina and Honka, Elisabeth and Xie, Ying, A Model of Tie Formation, Product Adoption, and Content Generation (January 14, 2019). Available at SSRN: https://ssrn.com/abstract=2992274 or http://dx.doi.org/10.2139/ssrn.2992274

Mina Ameri (Contact Author)

University of Pittsburgh - University of Pittsburgh, Katz Graduate School of Business, Students ( email )

Pittsburgh, PA
United States

University of Texas at Dallas ( email )

2601 North Floyd Road
Richardson, TX 75083
United States

Elisabeth Honka

University of California, Los Angeles (UCLA) - Anderson School of Management ( email )

110 Westwood Plaza
Los Angeles, CA 90095-1481
United States

Ying Xie

University of Texas at Dallas ( email )

2601 North Floyd Road
Richardson, TX 75083
United States

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