Journal article

Popularity signals in trial-offer markets with social influence and position bias

F Maldonado, P Van Hentenryck, G Berbeglia, F Berbeglia

European Journal of Operational Research | Elsevier | Published : 2018

Abstract

This paper considers trial-offer markets where consumer preferences are modelled by a multinomial logit with social influence and position bias. The social signal for a product is given by its current market share raised to power r (or, equivalently, the number of purchases raised to the power of r). The paper shows that, when r is strictly between 0 and 1, and a static position assignment (e.g., a quality ranking) is used, the market converges to a unique equilibrium where the market shares depend only on product quality, not their initial appeals or the early dynamics. When r is greater than 1, the market becomes unpredictable. In many cases, the market goes to a monopoly for some product:..

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University of Melbourne Researchers