Title: Social Learning and Diffusion of Pervasive Goods: An Empirical Study of an African App Store,
Abstract: In this study, the authors develop a structural model that combines a macro
diffusion model with a micro choice model to control for the effect of social
influence on the mobile app choices of customers over app stores. Social
influence refers to the density of adopters within the proximity of other
customers. Using a large data set from an African app store and Bayesian
estimation methods, the authors quantify the effect of social influence and
investigate the impact of ignoring this process in estimating customer choices.
The findings show that customer choices in the app store are explained better
by offline than online density of adopters and that ignoring social influence
in estimations results in biased estimates. Furthermore, the findings show that
the mobile app adoption process is similar to adoption of music CDs, among all
other classic economy goods. A counterfactual analysis shows that the app store
can increase its revenue by 13.6% through a viral marketing policy (e.g., a
sharing with friends and family button).