Social network design for inducing effort
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Social network design for inducing effort Pinar Yildirim1 · Yanhao Wei2 · Christophe Van den Bulte1 · Joy Lu3 Received: 26 June 2019 / Accepted: 15 April 2020 / © Springer Science+Business Media, LLC, part of Springer Nature 2020
Abstract Many companies create and manage communities where consumers observe and exchange information about the effort exerted by other consumers. Such communities are especially popular in the areas of fitness, education, dieting, and financial savings. We study how to optimally structure such consumer communities when the objective is to maximize the total or average amount of effort expended. Using network modeling and assuming peer influence through conformity, we find that the optimal community design consists of a set of disconnected or very loosely connected sub-communities, each of which is very densely connected within. Also, each sub-community in the optimal design consists of consumers selected such that their “standalone” propensity to exert effort correlates negatively with their propensity to conform and correlates positively with their propensity to influence others. Keywords Customer community design · Network design · Network optimization · Peer influence JEL Classification C7 · D85 · D91 · Z13 · M31 Electronic supplementary material The online version of this article (https://doi.org/10.1007/s11129-020-09227-6) contains supplementary material, which is available to authorized users. Yildirim: Assistant Professor of Marketing, The Wharton School, University of Pennsylvania, email: [email protected]. Wei: Assistant Professor of Marketing, Marshall School of Business, University of Southern California. Van den Bulte: Gayfryd Steinberg Professor and Professor of Marketing, The Wharton School, University of Pennsylvania. Lu: Assistant Professor of Marketing, Tepper School of Business, Carnegie Mellon University. All correspondence about the manuscript can be directed to the first author. We thank Anthony Dukes, Upender Subramanian, Olivier Toubia, and the reviewer team for comments on an earlier draft. Pinar Yildirim
[email protected] 1
The Wharton School, University of Pennsylvania, Philadelphia, PA, USA
2
Marshall School of Business, University of Southern California, Los Angeles, CA, USA
3
Tepper School of Business, Carnegie Mellon University, Pittsburgh, PA, USA
P. Yildirim et al.
1 Introduction Over the last two decades, marketers have become increasingly keen on leveraging peer influence among customers. Numerous firms and platforms connect consumers who do not know each other into online communities and allow them to observe each others’ activity to increase the level or consistency of the effort they exert to achieve a goal. Members of the ALS community on PatientsLikeMe share data allowing them to see what actions are taken by other patients and whether their progress is fast, slow, or about average. Opower, now part of Oracle, works with many utilities to share energy consumption information from similar households in one’ s vicinity to reduce
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