ABSTRACT
Traditionally, firms have communicated with consumers through advertising. However, it has always been known that a large fraction of the information flow about products occurs between consumers. In the past decade, the growth of technologies (such as the Internet, smartphones, and so on) has allowed firms to play a more active role in these consumer-to-consumer conversations, or, more broadly, “social interactions.” In Godes et al. (2005) we define “social interactions” as an action that a) is taken by an individual not actively engaged in selling the product or service and that b) impacts others’ expected utility for the product or service. (We will refer to the person making the product recommendation as the “sender,” and the person receiving the information as the “receiver.”) That is, social interactions are broader than the traditional concept of word-of-mouth (WOM) since they encompass new types of communication such as email, blogging, and text-messaging.
