Do Your Online Friends Make You Pay? A Randomized Field Experiment on Peer Influence in Online Social Networks
[ABSTRACT READ IN FULL at the Crossref item record; full text not read] Bapna, R., & Umyarov, A. (2015). 'Do Your Online Friends Make You Pay? A Randomized Field Experiment on Peer Influence in Online Social Networks.' Management Science, 61(8), 1902-1920. doi:10.1287/mnsc.2014.2081. the strongest genuinely randomised causal result anywhere near this question. They call compelling causal evidence of peer influence in online social networks 'the holy grail of modern research', name the rival mechanisms, peer influence against homophily against unobservable external stimuli, note that these 'lead to similar observational data, yet have vastly different policy implications', and then: 'we present a novel randomized experiment that tests the existence of causal peer influence in the general population, one that did not involve subject recruitment for experimentation, of a particular large-scale online social network. We utilize a unique social feature to exogenously induce adoption of a paid service among a group of randomly selected users, and in the process develop a clean exogenous randomization of treatment and control groups.' Across nonparametric, semiparametric and parametric approaches, from resampling-based inference to ego-level random effects to logistic regression to survival models, the estimates are 'close to identical, statistically and economically significant', and 'Our estimates show that peer influence causes more than a 60% increase in odds of buying the service due to the influence coming from an adopting friend.' Users with fewer friends show a stronger relative increase. Their conclusion: 'peer influence is a powerful force in getting users from free to premium levels, a known challenge in freemium communities.' FRAME IT EXACTLY: this is the strongest causal evidence that a social tie can make somebody pay for something, and it is not evidence that
[ABSTRACT READ IN FULL at the Crossref item record; full text not read] Bapna, R., & Umyarov, A. (2015). 'Do Your Online Friends Make You Pay? A Randomized Field Experiment on Peer Influence in Online Social Networks.' Management Science, 61(8), 1902-1920. doi:10.1287/mnsc.2014.2081. the strongest genuinely randomised causal result anywhere near this question. They call compelling causal evidence of peer influence in online social networks 'the holy grail of modern research', name the rival mechanisms, peer influence against homophily against unobservable external stimuli, note that these 'lead to similar observational data, yet have vastly different policy implications', and then: 'we present a novel randomized experiment that tests the existence of causal peer influence in the general population, one that did not involve subject recruitment for experimentation, of a particular large-scale online social network. We utilize a unique social feature to exogenously induce adoption of a paid service among a group of randomly selected users, and in the process develop a clean exogenous randomization of treatment and control groups.' Across nonparametric, semiparametric and parametric approaches, from resampling-based inference to ego-level random effects to logistic regression to survival models, the estimates are 'close to identical, statistically and economically significant', and 'Our estimates show that peer influence causes more than a 60% increase in odds of buying the service due to the influence coming from an adopting friend.' Users with fewer friends show a stronger relative increase. Their conclusion: 'peer influence is a powerful force in getting users from free to premium levels, a known challenge in freemium communities.' FRAME IT EXACTLY: this is the strongest causal evidence that a social tie can make somebody pay for something, and it is not evidence that
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Bapna, R., & Umyarov, A. (2015). Do Your Online Friends Make You Pay? A Randomized Field Experiment on Peer Influence in Online Social Networks. Management Science, 61(8), 1902-1920. doi:10.1287/mnsc.2014.2081