Peer Influence in the Adoption of Video Games

Abstract

The authors investigate how peer influence affects customers' product adoption behaviors in emerging video game platforms. Understanding peer influence is critical to motivating users' willingness to purchase and improving game publishers' marketing performance. While similarities between socially linked users can be viewed as a consequence of social influence, homophily may also contribute to such phenomenon, causing identification difficulties in observational studies. Using data from the world's largest digital distribution platform for video games, the authors leverage state-of-the-art recommender system algorithms and propose an innovative framework to identify social influence in the adoption of video games when a confounding homophily effect is present. The results show that peer influence has a positive impact on platform users' adoption behaviors (i.e., a user tends to adopt a video game that has been purchased by his peers). This study also finds that peer influence would have been overestimated if homophily was not properly controlled.