Connecting People for Nudges: Optimal Design of Networks to Motivate Consumer Behavior

Tong Lu, Marketing, The Wharton School; Pinar Yildirim, Marketing, The Wharton School; and Yanhao Wei, USC Marshall

Abstract: An increasing number of start-ups create online and offline shared goal communities for individuals with similar goals to work towards them in the company of others. Such platforms allow individuals to connect and share effort information under the premise that it is more likely for consumers to reach their goals if they can gauge their activity in line with others’ activities. We study the problem of designing such social communities. We find that co-action communities can motivate individuals to exert higher effort than they would have on their own, if they are appropriately located in a social network with sufficient social influence. Moreover, such communities can help consumers at a greater extent if they are of larger scale and if consumers in the community maintain sufficient levels of heterogeneity in how much they care about their goal progress individually. Our study also offers a method to determine a locally optimal network to design such communities and develops a model to study the conditions under which consumers can be motivated to exert effort towards a goal.

Read the full working paper here.