Market Choices Driven by Reference Groups: A Comparison of Analytical and Simulation Results on Random Networks.

The present paper reports simulation results for a simple model of reference group influence on market choices, e.g., brand selection. The model was simulated on three types of random graphs, Erdos-Renyi, Barabasi-Albert, and Watts-Strogatz. The estimates of equilibria based on the simulation results were compared to the equilibria of the theoretical model. It was verified that the simulations exhibited the same qualitative behavior as the theoretical model, and for graphs with high connectivity and low clustering, the quantitative predictions offered a viable approximation. These results allowed extending the results from the simple theoretical model to networks. Thus, by increasing the positive response towards the reference group, the third party may create a bistable situation with two equilibria at which respective brands dominate the market. This task is easier for large reference groups.

Imagine-Self Perspective-Taking and Rational Self-Interested Behavior in a Simple Experimental Normal-Form Game.

The purpose of this study is to explore the link between imagine-self perspective-taking and rational self-interested behavior in experimental normal-form games. Drawing on the concept of sympathy developed by Adam Smith and further literature on perspective-taking in games, we hypothesize that introduction of imagine-self perspective-taking by decision-makers promotes rational self-interested behavior in a simple experimental normal-form game. In our study, we examined behavior of 404 undergraduate students in the two-person game, in which the participant can suffer a monetary loss only if she plays her Nash equilibrium strategy and the opponent plays her dominated strategy. Results suggest that the threat of suffering monetary losses effectively discourages the participants from choosing Nash equilibrium strategy. In general, players may take into account that opponents choose dominated strategies due to specific not self-interested motivations or errors. However, adopting imagine-self perspective by the participants leads to more Nash equilibrium choices, perhaps by alleviating participants' attributions of susceptibility to errors or non-self-interested motivation to the opponents.

Market choices driven by reference groups. An evolutionary approach.

The present paper tries to answer analytically how much the reference group influence can affect an actual market share of a particular brand or product. It is found that the increase of the size of a reference group and the probability of following the majority within the reference group may lead to the temporary modest prevalence of one brand. This result requires a relatively large size of a reference group and a high probability of following the majority within the reference group. If these conditions are not satisfied the effect on the market share is negligible.