Title: Peer Influences on Consideration and Preferences

Abstract:

This study introduces a comprehensive framework for discrete choice that integrates peer effects within both preference structures and consideration sets. We define the equilibrium dynamics and identify the specific conditions necessary to reconstruct the entire model from a series of observed choices. Our approach permits peers to influence not only preferences but also the formation of consideration sets, or both simultaneously. We demonstrate that these distinct mechanisms of peer influence yield different behavioral signatures in empirical data, enabling the identification of the network structure and the nature of connections among agents. Leveraging this structural information, we proceed to recover the individual preferences and consideration processes for each agent. These nonparametric identification findings accommodate broad forms of agent heterogeneity and do not depend on exogenous covariate variation or changes in the available choice sets (menus). Applying our theoretical results to the expansion strategies of tea chains, we uncover evidence of restricted consideration. Furthermore, through counterfactual simulations, we illustrate how limited consideration impedes both market penetration and competitive intensity.

Source: arXiv Generated at: 2026-06-04 00:00:00 UTC