MIT Sloan Management Review Article on Pass the Word: Peer Influence Has Big Impact on Online Market Dynamics

As businesses increase their investments in social media marketing, they need better guidance about what works best. A three-year study of cryptocurrency markets has some answers.

As it turns out, popularity isn’t a concern for just high school students and rock stars. According to recent research, economic and social decisions rely on perceptions of popularity, too — especially online. Peer influence can have a huge effect on purchasing decisions, investments, and markets.

A three-year study of cryptocurrency markets — begun long before the recent spate of cryptocurrency hacks — dissected the dynamics of cyber-currency markets. The goal was to assess traders’ behavior and how susceptible they are to the actions of others. The findings are instructive for other online business behavior, as well — for instance, why consumers buy a particular brand, or why they follow someone on social media.