Social Influence and Consumption: Evidence from the Automobile Purchases of Neighbors

Grinblatt, Mark; Keloharju, Matti; Ikäheimo, Seppo

doi:10.2139/ssrn.995855

Cited by 25 publications

(28 citation statements)

References 34 publications

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“…The economic aspirations and spending decisions of American households are shaped by forces operating at diverse levels of aggregation, from media depictions at the national level (Chao & Schor, 1998;Pugh, 2009) to peer influences at the neighborhood level (Luttmer, 2005;Banerjee & Duflo, 2007;Grinblatt, Keloharju, & Ikäheimo, 2008). Metropolitan statistical areas (MSAs) are especially well suited for studying effects of income structure because they are more socioeconomically heterogeneous than typical residential neighborhoods but still define areas within which significant spatial mobilityand therefore interpersonal exchange -occurs.…”

Section: Why Compare Metropolitan Areas?mentioning

confidence: 99%

The local Joneses: Household consumption and income inequality in large metropolitan areas

Charles

Lundy

2013

Research in Social Stratification and Mobility

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Section: Why Compare Metropolitan Areas?mentioning

confidence: 99%

The local Joneses: Household consumption and income inequality in large metropolitan areas

Charles

Lundy

2013

Research in Social Stratification and Mobility

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“…We suspect that this distinction (negative-zero) would drive the existence of a negative effect of CSA information for the former, but a null effect for the latter. Moreover, there may be other ways for customers to reduce uncertainty regarding product fit, such as looking to role models, expert opinions, or geographic and/or group membership (Godes and Ofek 2004, Bell and Song 2007, Grinblatt et al 2008, Duflo and Saez 2003. Inclusion of such information may potentially lead to somewhat different interactions.…”

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confidence: 99%

“Ten Million Readers Can’t Be Wrong!,” or Can They? On the Role of Information About Adoption Stock in New Product Trial

2017

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Abstract. Most new-product frameworks in marketing and economics, as well as lay beliefs and practices, hold that the larger the stock of adoption of a new product, the greater the likelihood of additional adoption. Less is known about the underlying mechanisms as well as the conditions under which this central assumption holds. We use a series of field and consequential choice experiments to demonstrate the existence of nonpositive and even negative effects of large adoption stock information on the likelihood of subsequent adoption. The results highlight the degree of homophily with the adopting stock as well as the level of customer uncertainty as key characteristics determining the nature of the effect of stock information. In particular, information about a large existing adoption stock generates a positive effect on adoption only under moderate customer uncertainty combined with sufficient homophily; in other levels of uncertainty and/or homophily we find effects ranging from null to negative. This is the first direct test and demonstration of the intricate role of information about a large stock of adoption in the new product diffusion process, and it carries direct implications for marketers.

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“…However, the effects on winning households' immediate neighbors are even larger: increasing the probability that neighbors will buy a car in the next half year by nearly 7%, and reducing the average age of their principal cars by 7%. Grinblatt et al (2008) also study car purchases, using high-quality, daily data with comprehensive coverage of Finland's two most-populated provinces, containing precise geographic location, car puchase information (including make and model), as well as a large number of control variables. Their econometric methodology concentrates on estimating the marginal effect on a household of the car purchases of its ten nearest neighbors, using more distant neighbors as an instrument for omitted control variables.…”

Section: Peer Effects Literaturementioning

confidence: 99%

Visceral Emotions, Within-Community Communication, and (Ill-Judged) Endorsement of Financial Propositions

Kaivanto

2014

SSRN Journal

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The 2007-08 financial crisis exposed poignant examples of ill-judged risk accretion in both tails of the Lorenz curve: concentrations of inappropriate mortgages within low-income neighborhoods, and concentrations of Bernard Madoff's victims within wealthy, predominantly Jewish country-club communities. These examples share three key elements. First, individual behavioral decision makers take decisions privately but contribute to the build-up of risk within the community. Second, sales agents employ psychological persuasion techniques (bypassing logical processes), and trigger visceral emotions (overriding rational deliberation). Third, community membership immerses individuals within information flows that trigger invidious visceral emotions, and leads to biased inferences due to sample-size illusion and persuasion bias. We develop a closed-form model based on Signal-Detection Theory (SDT) that incorporates all three abovementioned elements: it is behavioral in employing a Prospect Theory (PT) objective function; peripheral-route persuasion and visceral emotions are incorporated through their impacts on discriminability d ′ ; and sample-size illusion and persuasion bias are incorporated through their effects on the score θ. This PT-SDT model predicts that visceral-emotion-charged hot states can short-circuit the capacity to practice caveat emptor, carrying implications for regulation and for our understanding of US household-borrowing growth 2001-2006.

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Social Influence and Consumption: Evidence from the Automobile Purchases of Neighbors

Cited by 25 publications

References 34 publications

The local Joneses: Household consumption and income inequality in large metropolitan areas

The local Joneses: Household consumption and income inequality in large metropolitan areas

“Ten Million Readers Can’t Be Wrong!,” or Can They? On the Role of Information About Adoption Stock in New Product Trial

Visceral Emotions, Within-Community Communication, and (Ill-Judged) Endorsement of Financial Propositions

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