Viral Social Learning

43 Pages Posted: 27 Dec 2018 Last revised: 2 Apr 2020

See all articles by David McAdams

David McAdams

Duke University - Fuqua School of Business

Yangbo Song

School of Management and Economics, CUHK (SZ)

Date Written: April 1, 2020

Abstract

An innovation (e.g., new product or idea) spreads like a virus, transmitted by those who have previously adopted it. We characterize equilibrium adoption dynamics and the resulting lifecycle of virally-spread innovations. Herding on adoption can occur but only early in the innovation lifecycle, and all virally-spread innovations eventually become obsolescent. A producer capable of advertising directly to consumers finds it optimal to wait and allow awareness to grow virally initially after launch. When most innovations would otherwise be high (low) quality absent any viral social learning, running an optimal-length viral campaign decreases (increases) equilibrium investment in innovation quality.

Keywords: social learning, viral marketing, SIR model, economic epidemic

JEL Classification: C72, D62, D83

Suggested Citation

McAdams, David and Song, Yangbo, Viral Social Learning (April 1, 2020). Available at SSRN: https://ssrn.com/abstract=3299129 or http://dx.doi.org/10.2139/ssrn.3299129

David McAdams

Duke University - Fuqua School of Business ( email )

Box 90120
Durham, NC 27708-0120
United States

Yangbo Song (Contact Author)

School of Management and Economics, CUHK (SZ) ( email )

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