Peer Effects in Service Usage

Abstract

Researchers in marketing, sociology, and economics have been interested in the role of social interactions in consumer choice and consumption behaviors. Social interactions, labeled variously as peer effects, social contagion, and neighborhood effects, have important implications for firms’ allocation of marketing efforts. In this research, we test and provide empirical evidence for peer effects in consumers’ service usage in the context of gym-going behaviors. Using a detailed individual-level membership and attendance data at one of the largest health club chains in the U.S., we document that a focal member’s gym-going behavior is influenced by the behaviors and characteristics of the peers at the same branch.