Effects of Information Diffusion in OnlineWord-of-Mouth Communication Among Consumers

Abstract

The effects of online word-of-mouth communication among consumers were investigated using an agentbased model. In order to explain consumers’ purchasing behaviours from the view of consumer behavioral theory, we installed heterogeneity on consumers based on individual informative actions. Consumers were assumed to communicate with other consumers selectively using one of three policies: random selection, similar level selection, and higher level selection. Simulation showed that the most effective policy for selecting communication partners depends on the characteristics of goods under consideration. It also showed that increasing the number of communication partners and changing distribution of consumers positively affects purchasing behaviour while increasing consumer memory through such technologies as blogs does not. These findings help clarify how consumers deal with their cognitive limitations in the face of the massive amount of information now available.