Visibility and Peer Influence in Durable Good Adoption

Abstract

The underlying channels through which peer influence operates in durable good adoption can affect the ability of marketers to leverage them. In this paper, we assess whether the visibility of peers' adoption decisions leads to greater peer influence. The context we study is residential rooftop solar panels. We exploit the plausibly exogenous location and orientation of peers' rooftop solar panels relative to proximate roadways and visual obstructions, such as vegetation, in order to determine whether geographically proximate peer installations increase a household's probability of solar adoption more if they are visible from the road. We find that the total angle of visibility of peer installations on the same street positively affects solar adoption decisions at distances of at least 500 meters. In contrast, we only find a positive effect of non-visible solar arrays within 100m, which may be due to causal peer influence via other channels such as word-of-mouth, or very localized unobservable effects. The effect of peer visibility is moderated by the economic value the peers receive from installing solar, providing suggestive evidence of social learning through visual information.

Keywords: peer effects, social interactions, diffusion, visibility, solar