Daniel Birke

Social Networks and Choice of Mobile Phone Operator

The aim of this paper is to estimate the importance of (induced) network effects in the use of mobile telephones and the impact of the structure of social networks on a consumers adoption decision. This is done using social network data obtained from a survey of second year undergraduate students at the University of Nottingham Business School. We find that students strongly coordinate their choice of mobile phone operators, but do this only for operators which charge a price difference between on- and off-net calls. Coordination is strongest within groups of students who frequently interact with each other, but weaker with students from outside their group. Furthermore, the students did not coordinate their choice of mobile handsets - there rather is a tendency to choose a different handset than the one used by their friends.

Who you are or whom you know? Consumption interdependences in social networks

This paper presents an analysis of whether a consumers decision to switch from one mobile phone provider to another is driven by individual consumer characteristics or by actions of other consumers in her social network. Such consumption interdependences are estimated using a unique dataset, which contains transaction data based on anonymized call records from a large European mobile phone carrier to approximate a consumers social network. Results show that network effects have an important impact on consumers’ switching decisions: switching decisions are interdependent between consumers who interact with each other and this interdependence increases in the closeness between two consumers as measured by the calling data. In other words, if a subscriber switches carriers, she is also affecting the switching probabilities of other individuals in her social circle. The paper argues that such an approach is of high relevance to both switching of providers and to the adoption of new products.