How many times we tend to buy products that our peers own, being it a smartphone, an app or a car?
People’s decisions often are influenced by the decisions made by their friends and neighbours. This has been found in a wide range of settings, from financial decision, to technology adoption, education and energy consumption. One may decide to imitate others’ behaviour because they learn from them; for example one thinks that products purchased by others are of higher quality. Alternatively, one may desire what others own for reasons of status, or for keeping up with the Jonses. Sometimes the two mechanisms overlap and it is not easy to understand which one is in action. In the paper we propose this week, Bursztyn and coauthors try to disentangle the mechanisms underlying peer effects in financial decisions.
Are the same mechanisms in place for the uptake of energy efficient products? What is the role of peers and social networks in this context?