Visibility and Peer Influence in Durable Good Adoption
64 Pages Posted: 24 Jun 2019 Last revised: 9 Oct 2020
Date Written: September 8, 2020
The underlying channels through which peer influence operates in durable good adoption can affect the ability of marketers to leverage them. In this paper, we assess whether the visibility of peers' adoption decisions leads to greater peer influence. The context we study is residential rooftop solar panels. We exploit the plausibly exogenous location and orientation of peers' rooftop solar panels relative to proximate roadways and visual obstructions, such as vegetation, in order to determine whether geographically proximate peer installations increase a household's probability of solar adoption more if they are visible from the road. Highlighting the role of peer influence at the very local level, we find evidence of peer influence for non-visible solar arrays only within 100m on the same street. We also demonstrate that installations that are visible from the street exert peer influence at distances of at least 500m. A peer installation within 500m that is visible from proximate roadways at angles totaling 90 degrees exerts the same magnitude peer effect as a non-visible installation within 100m. The effect of peer visibility is moderated by the economic value the peers receive from installing solar, providing suggestive evidence of social learning through visual information.
Keywords: peer effects, social interactions, diffusion, visibility, solar
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