Social Learning and Network Externalities: Replicating Gilchrist and Sands (2016)

Abstract

Social learning plays a limited role in determining movie sales momentum according to recent research by Gilchrist and Sands (2016), who instead emphasize the importance of network externalities. Narrow replication of their robustness test for social learning, which compares sales momentum for high- and low-quality movies, reveals no evidence of network externalities and strong evidence of social learning. Results from a wider replication are less conclusive. While we can confirm two additional implications from a model of social learning, replications of their primary test for social learning with alternative measures of movie quality reveal evidence of both learning and network externalities. We conclude that social learning plays a larger role than Gilchrist and Sands' (2016) findings imply, even though the existence of network externalities cannot be ruled out.

Keywords: network externalities, social learning

JEL Classification: D83