(5 Sep 2005)

We present an analysis of a person-to-person recommendation network, consisting of 4 million people who made 16 million recommendations on half a million products. We observed the propagation of recommendations and the cascade sizes, which can be explained by a stochastic dynamic model. We then established how the recommendation network grows over time and how effective it is from the viewpoint of the senders and receivers of recommendations. While on average recommendations are not very effective at inducing purchases and do not spread very far, there are product and pricing categories for which viral marketing seems to be very effective.

Journal of Product and Brand Management, Vol. 14, No. 2. (February 2005), pp. 123-128.

The American Journal of Sociology, Vol. 91, No. 3. (1985), pp. 481-510.

How behavior and institutions are affected by social relations is one of the classic questions of social theory. This paper concerns the extent to which economic action is embedded in structures of social relations, in modern industrial society. Although the usual neoclasical accounts provide an “undersocialized” or atomized-actor explanation of such action, reformist economists who attempt to bring social structure back in do so in the “oversocialized” way criticized by Dennis Wrong. Under-and oversocialized accounts are paradoxically similar in their neglect of ongoing structures of social relations, and a sophisticated account of economic action must consider its embeddedness in such structures. The argument in illustrated by a critique of Oliver Williamson’s “markets and hierarchies” research program.

(17 Jun 2005)

As an alternative to rigid DRM measures, ways of marketing virtual goods through multi-level or networked marketing have raised some interest. This report is a first approach to multi-level markets for virtual goods from the viewpoint of theoretical economy. A generic, kinematic model for the monetary flow in multi-level markets, which quantitatively describes the incentives that buyers receive through resales revenues, is devised. Building on it, the competition of goods is examined in a dynamical, utility-theoretic model enabling, in particular, a treatment of the free-rider problem. The most important implications for the design of multi-level market mechanisms for virtual goods, or multi-level incentive management systems, are outlined.

Anthropology & Medicine, Vol. 13, No. 3. (December 2006), pp. 225-236.