DECISION MAKING WITH SOCIAL MEDIA PLATFORMS: THE EFFECT OF PEER OPINIONS ON INVESTMENT AND PRODUCT ADOPTION

In this dissertation, I study how peer opinions from social media could help decision making for investors and consumers. In particular, I investigate two platforms that are augmented with social media functionality: an investment-based platform; and an online video gaming and distributing platform. In the first essay, I study the relationship between the opinion divergence transmitted through investment-based social media platforms and stock volatility. For each stock, investors may hold different opinions on its performance characterized by bullish, bearish, and neutral. I develop a metric that measures the opinion divergence among investors and test its power in explaining future stock volatility. I find that investors’ opinion divergence is negatively associated with future return volatility across a variety of holding periods. Moreover, the impact of opinion divergence will become attenuated over time. In the second essay, I study peer influence in video game adoption. The main challenge in the identification of peer influence is the confounding effect of homophily that introduces selection bias: People with similar characteristics and preferences are more likely to become friends. Taking advantage of the state-of-the-art recommender system algorithms, I develop a novel framework to estimate consumer tastes on products which endogenously drive tie formation and use it to control for selection. In line with previous studies, I find that ignoring the homophily will lead to a biased estimate of peer influence. In the third essay, I study various factors influencing the adoption behavior of video games. The results show that uses’ gaming experience, information advantage, and games’ targeting strategy are associated with the game adoption. Different from existing studies that focus on blockbuster games in the long-tailed distribution of sales data, this chapter also investigates independent games characterized by low investment and fewer sales. Results show the heterogeneous behavior of adoption in these two types of games.

Many thanks to Yang’s dissertation committee: • Committee Chair: Chuanren Liu - Assistant Professor - University of Tennessee • Committee Member: Hande Benson - Associate Professor - Drexel University • Committee Member: Jade Lo - Associate Professor - Drexel University • Committee Member: Jinwook Lee - Assistant Professor - Drexel University • Committee Member: Wenjing Shen - Associate Professor - Drexel University