Quantitative Marketing and Economics, volume 18, pages 381–417, July 2020
Abstract: Many companies create and manage communities where consumers observe and exchange information about the effort exerted by other consumers. Such communities are especially popular in the areas of fitness, education, dieting, and financial savings. We study how to optimally structure such consumer communities when the objective is to maximize the total or average amount of effort expended. Using network modeling and assuming peer influence through conformity, we find that the optimal community design consists of a set of disconnected or very loosely connected sub-communities, each of which is very densely connected within. Also, each sub-community in the optimal design consists of consumers selected such that their “standalone” propensity to exert effort correlates negatively with their propensity to conform and correlates positively with their propensity to influence others.