Social Contagion and Diffusion: Modeling the Direct and Indirect Peer Influences on Repeat Purchase by Online Game Players

Consumers’ online purchase decisions can be affected by both direct and indirect peer influences. Literature has provided empirical evidence about both types of influence when the outcome is binary. However, there is no existing work about how these two types of peer influence impact repeatpurchase of consumers in a certain period of time. In this study, we want to fill such gap by investigating the interdependent repeat-purchase of online game players embedded in a social network. We build a new hierarchical Bayesian model that can support response variable following Poisson distribution and simultaneously include both types of peer influence, direct and indirect. Our empirical results show that both types of peer influence have significant impact on players’ repeatpurchase decision but the influences may not have the same direction. Also, we find that the strength of the peer influences is associated with both network structure features and the strength of grouplevel pressure. The implication of our newly developed model includes first, helping online game providers develop effective targeting strategy to convert customers purchase more through peer influence, and second, comparing impact of different types of peer influences on repeat-purchase in social media platforms.