This article was downloaded by: [134.117.10.

200] On: 06 August 2020, At: 07:26

Publisher: Institute for Operations Research and the Management Sciences (INFORMS)
INFORMS is located in Maryland, USA

Management Science
Publication details, including instructions for authors and subscription information:
http://pubsonline.informs.org

Creating Social Contagion Through Firm-Mediated

Message Design: Evidence from a Randomized Field
Experiment
Tianshu Sun, Siva Viswanathan, Elena Zheleva

To cite this article:

Tianshu Sun, Siva Viswanathan, Elena Zheleva (2020) Creating Social Contagion Through Firm-Mediated Message Design:
Evidence from a Randomized Field Experiment. Management Science

Published online in Articles in Advance 05 Aug 2020

. https://doi.org/10.1287/mnsc.2020.3581

Full terms and conditions of use: https://pubsonline.informs.org/Publications/Librarians-Portal/PubsOnLine-Terms-and-

Conditions

This article may be used only for the purposes of research, teaching, and/or private study. Commercial use
or systematic downloading (by robots or other automatic processes) is prohibited without explicit Publisher
approval, unless otherwise noted. For more information, contact permissions@informs.org.

The Publisher does not warrant or guarantee the article’s accuracy, completeness, merchantability, fitness
for a particular purpose, or non-infringement. Descriptions of, or references to, products or publications, or
inclusion of an advertisement in this article, neither constitutes nor implies a guarantee, endorsement, or
support of claims made of that product, publication, or service.

Copyright © 2020, INFORMS

Please scroll down for article—it is on subsequent pages

With 12,500 members from nearly 90 countries, INFORMS is the largest international association of operations research (O.R.)
and analytics professionals and students. INFORMS provides unique networking and learning opportunities for individual
professionals, and organizations of all types and sizes, to better understand and use O.R. and analytics tools and methods to
transform strategic visions and achieve better outcomes.
For more information on INFORMS, its publications, membership, or meetings visit http://www.informs.org
 MANAGEMENT SCIENCE
Articles in Advance, pp. 1–20
http://pubsonline.informs.org/journal/mnsc ISSN 0025-1909 (print), ISSN 1526-5501 (online)

Creating Social Contagion Through Firm-Mediated Message

Design: Evidence from a Randomized Field Experiment
Tianshu Sun,a Siva Viswanathan,b Elena Zhelevac
a
Marshall School of Business, University of Southern California, Los Angeles, California 90089; b Robert H. Smith School of Business,
University of Maryland, College Park, Maryland 20742; c Department of Computer Science, University of Illinois at Chicago, Chicago,
Illinois 60607
Contact: tianshus@marshall.usc.edu, https://orcid.org/0000-0002-9786-044X (TS); sviswana@rhsmith.umd.edu,
https://orcid.org/0000-0002-2730-0746 (SV); ezheleva@uic.edu (EZ)

Received: February 6, 2017
Revised: July 15, 2018; November 28, 2018
Accepted: January 3, 2019
Published Online in Articles in Advance:
August 5, 2020
https://doi.org/10.1287/mnsc.2020.3581
Copyright: © 2020 INFORMS
Abstract. We study whether and how a firm can enhance social contagion simply by
varying the message shared by customers with their friends. We focus on two key com-
ponents of information contained in the message—information about the sender’s purchase
status prior to referral and information about the existence of referral rewards—and their
impacts on the recipient’s purchase decision and further referral behavior. In collaboration
with an online daily-deal platform, we design and conduct a large-scale randomized field
experiment involving more than 75,000 customers to identify the causal effect of different
message designs on creating social contagion. We find that small variations in message
content can have a significant impact on both recipients’ purchase and referral behaviors.
Specifically, we find that (1) adding only information about the sender’s purchase status
increases the likelihood of the recipient’s purchase but has no impact on follow-up referrals,
(2) adding only information about referral reward increases the recipient’s follow-up re-
ferrals but has no impact on purchase likelihood, and (3) adding information about both the
sender’s purchase and the referral rewards increases neither the likelihood of purchase nor
follow-up referrals. We build a model to analyze the tradeoff between more adoption and
more diffusion and implement the best-performing message design in a production system
with millions of shared messages per year (with a projected increase in net profits of more
than US$1 million per year). We further exploit the rich heterogeneity in deal, recipient,
sender, and social-tie characteristics and examine the mechanisms underlying the effect of
message design. The results suggest that both social learning and social utility are at work,
and the attenuation in the recipient’s purchase is mainly driven by a decrease in social
learning resulting from credibility concerns. The findings of the study provide actionable
guidelines to firms for optimal design of messages at the aggregate and more granular levels.

History: Accepted by Anandhi Bharadwaj, information systems.

Fundings: T. Sun acknowledges the research grant and support from USC Greif Center for Entre-
preneurial Studies, USC Institute of Outlier Research in Business (iORB), and ICCI.
Supplemental Material: The online appendices are available at https://doi.org/10.1287/mnsc.2020.3581.

Keywords: randomized field experiment • social contagion • online word of mouth • observational learning • referrals

1. Introduction An important element of online social interactions,

Online social interactions, in the form of website-
mediated emails, social media posts, and mobile
messages, are becoming increasingly important and
have been studied extensively (Godes and Mayzlin
2004, Chen et al. 2011, Aral and Walker 2012, Gu et al.
2012, Susarla et al. 2012, Muchnik et al. 2013, Hong
et al. 2016, Wang et al. 2018, Sun and Taylor 2020). An
interesting aspect of the online setting is that while
consumers are able to quickly disseminate online
word of mouth about firms and products, firms are
also increasingly able to mediate these interactions
among customers. Firms have transitioned from be-
ing passive observers and moderators to becoming
active mediators of online social interactions and
referrals (Godes et al. 2005).
1
and the primary medium by which social influence is
transmitted, is the message that is shared between
senders and recipients. In the case of firm-mediated
messaging among users, although the sender can choose
the recipients with whom he or she shares the message,
the firm, nevertheless, has the ability to control several
aspects of the message. Such firm-mediated messaging
is increasingly the norm in a large number of online
websites, retailers, and social platforms. Despite the
increasing use of such mechanisms and the large volume
of firm-mediated information sharing,1 there is very
limited understanding of how different message de-
signs impact social contagion. Given the ability of the
firm to partially control the content of the message that
is shared between the sender and the recipient, our study
 Sun, Viswanathan, and Zheleva: Social Contagion and Firm-Mediated Message Design
2 Management Science, Articles in Advance, pp. 1–20, © 2020 INFORMS
seeks to examine whether and how a firm can enhance
social contagion simply by varying the message shared
by customers with their social connections.
Identifying the effect of message content on social
contagion (recipient’s purchase and further referrals)
has been traditionally difficult for three reasons: First,
the content of the message in interpersonal commu-
nications is usually unobservable by researchers (Godes
et al. 2005); second, and probably more fundamental,
the content of the message may be correlated with
sender and recipient characteristics, tie strength, and
the characteristics of the recommended product, that is,
the issue of endogeneity (Manski 1993, Ma et al. 2015);
and third, there is the issue of external incentives,
because interpersonal communications are often stra-
tegic (Crawford and Sobel 1982). Several approaches
for identifying peer effects have been proposed, in-
cluding dynamic matched sampling (Aral et al. 2009),
structural models (Ghose and Han 2011), and in-
strumental variables (Tucker 2008). However, most of
these methods are not appropriate for studying the
causal impact of message design on social contagion
outcomes because of unobserved data and potential
endogeneity; finally, a sender’s sharing action already
increases product awareness and signals product
quality to the recipient, regardless of the message
content (Kornish and Li 2010). There is a strong in-
fluence between the sender and recipient, even in a
basic message with only product information. Thus, a
priori, it is not clear whether changes in message
content would lead to any incremental improvement
in social contagion outcomes. Recognizing these chal-
lenges, we actively design the shared message by care-
fully adding or hiding certain information components
and conduct a field experiment with a leading digital
platform to identify the causal impact of message design.
The randomized and large-scale experiment allows us to
fully observe the message content, overcome the endo-
geneity issue, and have enough power to detect the effect
of message design.
Specifically, we are interested in the following
questions:
1. Can firms influence social contagion outcomes
through the design of the shared message?
2. If so, can firms improve the two key outcomes
in social contagion—that is, the recipient’s purchase
(adoption) and the recipient’s further successful re-
ferrals (diffusion)—at the same time?
3. Can we gain some insights about the underlying
process and understand why certain message designs
can be more effective?
4. Are particular types of message designs more ef-
fective for promoting specific deals or engaging partic-
ular recipients when sent by specific types of senders?
In other words, should firms design the message dif-
ferently based on the patterns of information sharing?
We focus on two key components of information con-
tained in the message—information about the sender’s
purchase of the deal prior to referral and informa-
tion about the existence of a monetary reward for
referrals2—and their impacts on two key outcomes—
the recipient’s purchase and the recipient’s further
successful referrals. In collaboration with a leading
daily-deal platform in the United States, we designed
a randomized field experiment to study the causal
impact of each message component and their com-
bination in creating social contagion. We created four
versions of the message by including or excluding each
message component and randomly assigned the shared
messages into one of these four variants immediately
after a sender initiates the share (Figure 1). We worked
inside the platform and implemented the randomized
experiment involving more than 22,000 senders and
53,000 recipients in a large-scale in vivo environment
(Aral and Walker 2012, Walker and Muchnik 2014,
Bapna and Umyarov 2015, Taylor and Eckles 2018).
We find that small variations in the message con-
tent can have very large impacts on both recipient’s
purchase and referral behaviors. The results are both
statistically and economically significant, suggesting
that a minor change in message design at zero cost can
potentially have a substantial impact on customer
behaviors and the firm’s profits. Specifically, we find
that (1) adding only information about the sender’s
purchase status increases the likelihood of the re-
cipient’s purchase by more than 11% but has no
significant impact on the recipient’s successful re-
ferrals, (2) adding only information about the referral
reward increases the recipient’s successful referrals
by more than 50% but has no impact on purchase
likelihood, and (3) when the two components of in-
formation are made available at the same time, sur-
prisingly, neither purchase likelihood nor successful
referrals increase over the baseline message. The at-
tenuation3 is significant for both the recipient’s pur-
chase and the recipient’s further successful referrals.
Such a negative attenuation effect highlights a po-
tential tradeoff faced by the firm in designing the
message: should the firm increase adoption or en-
hance diffusion? Detailed analysis reveals that firms
should design messages that can increase adoption
when the baseline adoption rate is relatively low (as in
our case and most e-commerce settings) but may
choose the message that encourages diffusion when
the baseline adoption rate is relatively high (e.g., free
products, apps, and content). We also find that imple-
mentation of the best-performing message design (with
only information about the sender’s purchase) leads to
a significant increase in revenues from sharing for the
collaborating platform and improves customer ex-
perience, as shown by satisfaction surveys.
Sun, Viswanathan, and Zheleva: Social Contagion and Firm-Mediated Message Design
Management Science, Articles in Advance, pp. 1–20, © 2020 INFORMS 3

Figure 1. Message Design Used in the Randomized Field Experiment

Notes. The email subject line is the same across four groups. Users see different messages once they click the email. (Upper left) Mes-
sage template for control group C. (Lower left) Message template for treatment group T1 (only add information about sender’s purchase
status). (Upper right) Message template for treatment group T2 (only add information about referral reward). (Lower right) Message
template for treatment group T3 (add information for sender’s purchase and referral reward).

We then unpack the black box to investigate the
underlying mechanisms for both the increase in re-
cipient’s purchase and the attenuation effect. We in-
vestigate the two underlying mechanisms suggested
by prior research—social learning and social utility—
by exploiting the rich heterogeneity in deal, sender,
recipient, and social-tie characteristics. We find that
the effect of information about the sender’s purchase
is larger and more significant for recipients with less
experience as compared with those with greater ex-
perience, for less popular deals as compared with
more popular ones, and for purchases at an early
stage of the deal sales cycle as compared with those in
later stages—instances where information gleaned
from the sender’s purchase status is more valuable.
We also find that under these same conditions char-
acterized by higher uncertainty, adding information
about the referral rewards attenuates the positive effects
of the sender’s purchase information. Consistent with
the social-utility mechanism, we also find that adding
information about the sender’s purchase is more ef-
fective for social than nonsocial deals. The spectrum
of moderator effects not only reveals the underlying
mechanisms but also helps firms understand whether
particular types of message designs are more effective
for promoting specific deals or engaging particular
recipients when sent by specific types of senders and
shared through specific types of social ties.
Investigating the effect of message design on social
contagion provides new insights that are manageri-
ally and theoretically valuable. Our study contributes
to existing research and practice in a number of ways.
First, our study contributes to the word-of-mouth
(WOM) literature (Godes and Mayzlin 2004, Duan
et al. 2008, Gu et al. 2012). In all previous studies, the
firm either serves as a passive observer or as an ac-
tive facilitator of WOM through monetary and non-
monetary intervention (Burtch et al. 2017). Our paper
demonstrates a new and promising role of the firm:
the firm may serve as an active mediator or designer
 Sun, Viswanathan, and Zheleva: Social Contagion and Firm-Mediated Message Design
4 Management Science, Articles in Advance, pp. 1–20, © 2020 INFORMS

that can partially determine the content of online
WOM that is shared among customers. Given the
large volume of firm-mediated messaging and the
increasing ability of firms to partially control the content
of such shared messages, understanding the new role
and effect of message design is managerially valuable.
Specifically, the findings from our study highlight a
tradeoff between the adoption and referral outcomes in
the social contagion process4 and provide guidelines
to firms.
Second, our study provides new and useful insights
about the mechanisms underlying the social influence
process (Iyengar et al. 2015). First, embedding ad-
ditional components into a WOM message can still
lead to an incremental improvement in social influ-
ence.5 Such a finding suggests that a sender’s pur-
chase decision and explicit recommendation may
embody different signals and complement each other
in message design. In addition, the analyses of the
moderator effects of a rich set of sender, recipient,
deal, and social-tie characteristics also shed light on
the process. Our findings are consistent with the
notions that two mechanisms—social utility and so-
cial learning—are driving recipients’ purchases un-
der different conditions. Understanding these different
underlying mechanisms is not only of theoretical im-
portance but also of practical value because firms can
adopt alternative mechanisms (e.g., online review, a re-
ferral program, or network seeding) to drive conversions
depending on whether social learning or social utility
is at work. In doing so, our study also answers the recent
call by researchers (Godes 2011) who highlight the need
to move from understanding whether to why in social
contagion research.
Finally, our study provides an operational frame-
work for firms to evaluate the design of message
content through experimentation. In previous liter-
ature, the content of the message was always taken
as endogenous and inseparable from the product or
sender characteristics. However, in reality, each WOM
message (a social media post, a tweet, or a referral) may
contain multiple information components. Our study
is among the first to investigate the incremental effect
of each information component within the message
and how to optimally combine them in the message
design. We present a new experimental framework to
causally identify the effect and implement an in vivo
experiment to demonstrate how firms can actively
design shared messages to enhance social contagion
in a production system involving millions of cus-
tomers. This framework enables the firm to under-
stand the incremental contribution and cost of each
message component.
2. Theory and Hypothesis
In this section, we theorize the mechanisms under-
lying the effect of message design and develop hy-
potheses on the treatment effects on both recipient’s
purchase and further referrals (Figure 2). In the context
of WOM communication, the act of sharing by the
sender already conveys a strong signal to the recip-
ient (Kornish and Li 2010). However, a firm’s active

Figure 2. (Color online) Effect of Message Design on Recipient’s Purchase and Further Referrals

Notes. Negative attenuation effect on recipients’ purchase after adding info about referral reward (Hypothesis 1b, T3–T1 on purchase outcome). All
statements in the figure are based on comparison with the purchase outcome or referral outcome in baseline message C. The two negative attenuation
effects—one on recipients’ purchase and one on recipients’ further referrals—are represented using two arrows. H1a, Hypothesis 1a; H1b, Hy-
pothesis 1b; H2b, Hypothesis 2b.
Sun, Viswanathan, and Zheleva: Social Contagion and Firm-Mediated Message Design
Management Science, Articles in Advance, pp. 1–20, © 2020 INFORMS
design of the message component in a WOM com-
munication may create an additional impact on re-
cipients’ purchases. Specifically, we hypothesize that
adding different information components into the
message design may affect recipients’ purchase de-
cisions through two mechanisms: social learning and
social utility (Qiu et al. 2015). Social learning happens
when information about product quality is conveyed
through direct observation of others’ decision or
word of mouth (Banerjee 1992), whereas social utility
(or network effect) exists when one’s payoff depends
positively on other people’s action to consume the
same product (e.g., participating in the same event;
Gilchrist and Sands 2016).6 Previous studies have
examined these two mechanisms in different con-
texts: Cai et al. (2009) find that social learning is crucial
in determining individuals’ choice in restaurant din-
ing; Katona et al. (2011) demonstrate evidence of
strong social utility among members of a social net-
work site—for example, an individual who is con-
nected to existing adopters also has a higher adoption
probability. Both mechanisms may also drive the im-
pact of message designs in our context. First, infor-
mation about the sender’s purchase of the deal serves
as a social learning cue (Banerjee 1992, Cai et al. 2009),
and such information could positively influence the
recipient’s belief about the quality of the deal and,
consequently, increase his or her likelihood of pur-
chase. Second, for social deals that are characterized
by positive local network effects (e.g., events/shared
experience; Sundararajan 2007), knowledge about a
friend’s purchase could provide additional social
utility to the recipient and boost his or her purchase
likelihood. Combining both social learning and social
utility, we hypothesize the following.
Hypothesis 1a (Effect of Information About Sender’s Pur-
chase on Recipients’ Purchase). Compared with the con-
trol message, adding information about the sender’s pur-
chase will significantly increase the likelihood of recipients’
purchase—thatis,Prob(Purchase|ShowingSender’sPurchase)−
Prob(Purchase|Control Condition) > 0.7
However, once information about referral reward
is added to the message, the message design may
become less effective because the recipient might
have a credibility concern about the sender’s share
(Kornish and Li 2010). With the referral-reward in-
formation, the recipient might infer that the sender’s
share of the deal to him or her is not driven by intrinsic
motives (e.g., caring about him or her or excitement
about the deal) but rather by the external incentive. In
other words, the recipient may perceive the sender’s
share as a type of sales relationship. Tuk et al. (2009)
draw on theories of interpersonal relations (Fiske
1992) and argue that friendship and sales relation-
ships differ in the behaviors that are perceived as
5
acceptable, and the use of referral rewards introduces
a sales aspect that may harm the perceived sincerity of
the sender. Drawing on the multiple-motives infer-
ence framework (Reeder et al. 2002), Verlegh et al.
(2013) theorize and validate that referral rewards may
adversely affect recipients’ responses because it leads
them to infer ulterior (financial) motives for the re-
ferral. Specifically, in our context, when information
about a postpurchase referral reward is added to the
message with the sender’s purchase, the recipient
may immediately infer that the sender is eligible for a
monetary incentive in the referral process with full
certainty. The recipient may therefore question the
credibility of the share and the motive of the sender (is
the sender sharing because the deal is good for me or
because of the monetary incentive?) and become less
likely to make the purchase (Figure 2, left-to-right
arrow). Thus, we hypothesize the following.
Hypothesis 1b (Negative Attenuation Effect on Recipients’
Purchase). Compared with the message with only informa-
tion about the sender’s purchase, adding information about
the referral reward will significantly decrease the likelihood
of recipients’ purchase—that is, Prob(Purchase|Showing
Both Information) − Prob(Purchase|Showing Sender’s Pur-
chase) < 0.
We now turn our attention to the effect of message
design on the other important outcome in social
contagion—that is, recipients’ further successful re-
ferrals. On the one hand, adding only information
about the referral reward program may raise the
recipients’ awareness of the monetary incentive for
sharing and therefore increase their further referral
behaviors (Hong et al. 2016). Such an increase in re-
ferral behaviors would lead to more successful re-
ferrals (Biyalogorsky et al. 2001). On the other hand,
compared with the message with only information
about the postpurchase referral reward, adding in-
formation about the sender’s purchase status may
remove any uncertainty about the sender’s eligibil-
ity of getting referral rewards and allow the recipi-
ent to immediately draw the inference and potentially
raise concerns about the sender’s motive and credi-
bility. Similarly, the recipient may also form the be-
lief that if he or she initiates a referral, his or her
friends could easily infer his or her eligibility of getting
referral rewards 8 through the message design and
thus raise concerns about his or her credibility (Ryu
and Feick 2007, Hong et al. 2016). As a result, the
recipients under such a message design with both
referral reward and purchase status visible may be
less likely to make further referrals because of
concern about one’s own image (Figure 2, top-to-
bottom arrow, attenuation effect) and, naturally, be
less likely to bring in successful referrals. We hypoth-
esize the following.
 Sun, Viswanathan, and Zheleva: Social Contagion and Firm-Mediated Message Design
6 Management Science, Articles in Advance, pp. 1–20, © 2020 INFORMS
Hypothesis 2a (Effect of Referral Reward on Recipients’
Further Successful Referrals). Compared with the control
message, adding only information about the referral reward
will significantly increase recipients’ further successful
referrals—that is, Successful_Referrals(Showing Referral
Reward) – Successful_Referrals(Control Condition) > 0.
Hypothesis 2b (Negative Attenuation Effect on Recipients’
Further Successful Referrals). Compared with the message
with information about referral reward, adding information
about the sender’s purchase will significantly decrease re-
cipients’ further successful referrals—that is, Successful_
Referrals(Showing Both) – Successful_Referrals(Showing
Referral Reward) < 0.
We further theorize how user and deal character-
istics may moderate the effect of message design. This
allows us to examine the potential mechanisms un-
derlying the impacts of message design (Iyengar et al.
2015). As discussed earlier, social learning may play
an important role in the effect of message design on
the recipient’s purchase decision. Previous research
has shown that social learning is more effective when
the decision maker has less experience and more
uncertainty about the focal product (Cai et al. 2015),
because the additional information may lead to a more
positive update on his or her belief. As a result, the
message design with information about the sender’s
purchase may have a larger and more significant
impact on purchases for recipients with less experi-
ence, for less popular deals, and for purchases at an
early stage of the deal sales cycle—instances where
information gleaned from the sender’s purchase status
is more valuable. We also theorize that under these
same conditions characterized by higher uncertainty,
adding information about the presence of postpurchase
referral rewards to the sender’s purchase may atten-
uate the positive effects of message design. Under
those conditions, the recipients need the information
most when making their purchase decision. When
they raise a credibility concern and infer ulterior
motives for the referral, they may lose trust in the
sender’s share (Tuk et al. 2009). The attenuation from
such information loss may also lead to a larger decrease
in their purchase. Thus we hypothesize the following.
Hypothesis 3a (Moderators of the Effect of Sender’s
Purchase on Recipients’ Purchase). The message design
with only information about the sender’s purchase can lead
to a larger and more significant increase in purchases for
recipients with less experience as compared with those with
greater experience, for less popular deals as compared with
more popular ones, and for purchases at an early stage of the
deal sales cycle as compared with those in later stages.
Hypothesis 3b (Moderators of the Negative Attenuation
Effect on Recipients’ Purchase). Under the same situations
characterized by higher uncertainty as discussed earlier,
adding information about the presence of postpurchase re-
ferral rewards to the sender’s purchase status will have a
more significant attenuation on the positive effect of the
sender’s purchase information.
As discussed earlier, for social deals, information
about the sender’s purchase status could also serve
another important purpose: offering additional social
utility to the recipient. When knowing that the sender
is going to consume a social deal, the recipient is more
likely to make the purchase because the sender can
serve as a companion and create an additional net-
work effect (Hartmann 2010, Gilchrist and Sands
2016). Thus, we would expect a larger increase in
the effect of the sender’s purchase information for
social deals versus nonsocial deals. In addition, such
social utility should not be attenuated by the presence
of a referral reward because only friends’ adoption
status matters in creating network effects. Social
utility, by nature, only depends on other people’s
adoption decision (Sundararajan 2007) rather than
sharing motive or learned information. Previous re-
search has examined the role of network effect and
social learning and finds that those two channels
work independently (Cai et al. 2015, Qiu et al. 2015).
Thus, the attenuation of social learning as a result of
credibility concerns would not lead to the attenuation of
network effect. Thus we hypothesize the following.
Hypothesis 4a (Moderator Effect of the Social Deal on the
Effect of the Sender’s Purchase). The message design with
only information about the sender’s purchase can lead to
larger and more significant increase in purchases for social
deals as compared with nonsocial deals.
Hypothesis 4b (Moderator Effect of the Social Deal on
the Negative Attenuation Effect). There should not be any
significant difference in the attenuation effect in recipients’
purchase between social deals and nonsocial deals.
3. Research Context
In collaboration with a leading online daily-deal
platform, we design a randomized field experiment
to study the causal impact of firm-mediated message
design on social contagion outcomes. The platform
offers a wide range of daily deals for local services and
standard products at significant discounts and has a
large customer base. On each deal page on the firm’s
website, the platform provides channels through which
customers (senders) can share these deals with their
social connections. Customers (senders) can share deals
with their friends both before and after purchase by
clicking specific channel buttons (which are prominently
displayed). Specifically, senders who wish to share
through email can add a recipient’s email address in
Sun, Viswanathan, and Zheleva: Social Contagion and Firm-Mediated Message Design
Management Science, Articles in Advance, pp. 1–20, © 2020 INFORMS 7

the pop-up window and click “Send.”9 For email
referrals, the platform will then automatically deliver
emails to each recipient’s email address separately,10
using a predefined message template (Figure 1, control
message). The current experiment focuses on the
postpurchase sharing through email.11 Every day, a
large volume of email shares is made by customers
through the platform.12 After purchasing the deal, the
customer gets a voucher that he or she can use to
redeem the specific service or product within a period
of time (usually six months or more). The vast ma-
jority of senders have not actually consumed the
service or product at the time of sharing.
The platform sometimes uses a referral program to
encourage social interactions. Customers would be
eligible to get the referral reward only after they
purchase the deal.13 Specifically, the referral reward
banner is stated as “Buy first, then share a special link.
You may be eligible to get the deal for free.” To
participate in this program, a user is first required to
purchase a particular deal (referral reward banner:
“Buy first ...”). Then the user is given the option to
share the deal with as many friends as desired. The
user gets a referral reward when a certain number of
the recipients, as predetermined by the platform, pur-
chase the deal.14 Prior to our experiment, the platform
used the baseline message design for all shared
message (Figure 1, control group).
4. Experiment Design
Although previous experiments on social influence
(Aral and Walker 2011a, b, 2012; Bapna and Umyarov
2015; Sun et al. 2019b) have identified how users’
adoption of a product/service influences others, the
objective of this study is to identify how message
design, conditional on a user having organically shared
the deal with his or her social connections, may further
enhance such influence. As noted earlier, our study
seeks to understand the effect of two components of
information in the message—(1) information about the
sender’s purchase status and (2) information about
the existence of a referral reward—on the recipient’s
purchase and further successful referrals (Figure 3).
In addition to the original message used by the
platform (control), we create three new versions of the
shared message (T1–T3) by varying the visibility of
the sender’s purchase status and the referral reward
program, as illustrated in Figure 1. After the sender
confirms his or her share by clicking the “Send”
button, all of his or her messages are randomly
assigned to one of the four test groups (one control (C)
and three treatments (T1, T2, and T3; Figure 4). The
randomization happens after the sender’s share, and
thus the message content is completely orthogonal to
the sender’s own characteristics and sharing behav-
ior.15 Any difference in the recipient’s purchase and
further referral behaviors can therefore be directly
attributed to the difference in message design. Using
the experiment design, we are able to identify the
effects of both message components on the recipient’s
purchase and further referrals and whether adding
one would attenuate the effectiveness of the other.
When analyzing effectiveness of message design on
the recipient’s purchase, we focus on the direct re-
ferrals by initial senders (i.e., first-degree adoption)
rather than on the further referrals by recipients who
share after they make a purchase. In addition, when a
recipient purchases the shared deal and initiates a
new set of referrals on the same deal, he or she is
randomly assigned to one of the four test groups.
Thus, the difference in a recipient’s successful further
referrals is driven by the difference in the recipient’s
sharing behavior rather than the message content.
4.1. Level of Randomization and Control
of Contamination
Our intervention (message design) can vary at the level
of each sender–recipient share. However, to prevent

Figure 3. (Color online) Key Social Contagion Outcomes Under Tracking: Recipient’s Purchase and Recipient’s Further
Successful Referrals

Notes. In the illustrated scenario, two recipients out of three have purchased the deal through the sender’s share. Furthermore, one recipient
(recipient A) has brought one successful referral (the gray dot) after his or her own purchase. Thus, at the recipient level, the outcomes for
recipient A are as follows: recipient’s purchase = 1; recipient’s further successful referrals = 1.
 Sun, Viswanathan, and Zheleva: Social Contagion and Firm-Mediated Message Design
8 Management Science, Articles in Advance, pp. 1–20, © 2020 INFORMS
Figure 4. Illustration of Implementation of Message
Design Experiment
potential contamination within the local network of
a sender, we design the randomization at the level
of the sender—that is, all recipients of a sender who
shares a specific deal receive the same message. Ran-
domization at the level of the sender (rather than at
the level of recipients) allows for a better control of
potential spillovers between control and treatment
groups and helps ensure that the stable unit treat-
ment value assumption (SUTVA) is less likely to be
violated (Wooldridge 2012).16 Specifically, such spill-
overs happen much more often within the local network
of a sender as compared with across senders’ networks
(Aral and Walker 2011a). For instance, two friends of
a sender S are much more likely to communicate
about a specific deal (through sharing the deal or
through other modes of communication) and influ-
ence each other’s decision as compared with recipi-
ents of two different senders. (However, this is still a
possibility, and we later discuss approaches to miti-
gate this concern; see Online Appendix B).
4.2. Control of Attention/Saliency as a
Contagion Mechanism
In addition to identifying the treatment effects of
message design, we also carefully designed our ex-
periment to identify specific mechanisms underlying
social contagion. As noted in previous literature (e.g.,
Cai et al. 2009, Zhang 2010, Godes 2011, Sun et al.
2019a), contagion may be driven by several mecha-
nisms, including attention/saliency, social learning,
local network effects, conformity, and so on. In our
context, the first three channels are likely to be the most
prominent.17 Attention/saliency is expected to in-
fluence contagion (Cai et al. 2009). For instance, the
increased attention resulting from the awareness of a
friend’s purchase of a deal could in itself lead to a
higher likelihood of purchase, even if no additional
information is learned about the deal from the friend’s
purchase (social learning). In addition, previous litera-
ture has also shown that information-display formats
can also affect users’ decisions (e.g., Hong et al. 2004,
Kumar and Benbasat 2004, Jiang and Benbasant 2007).
Because our focus is on the role of social learning and
social utility mechanism, we use a two-stage structure
to control for the role of attention/saliency in creating
social contagion.
Specifically, we maintain the same subject line in
the sharing email (“[Friend’s name] thinks you may
like the product”). Thus, prior to opening the email
in the inbox, there should not be any difference in
attention/awareness because the email and its subject
line are exactly the same across the different treat-
ments and control. Once the email is opened and read
(indicating that the recipient is paying attention and is
interested in the content of the message), the message
contained in the email is simple, clear, and concise
(Figure 1) and is not likely to lead to any major dif-
ferences in attention/saliency.18 Thus, our design
tries to minimize potential differences that could arise
from differences in attention or saliency and enables
us to focus on the two mechanisms of interest.
5. Data
The randomized field experiment was run for a period
of six weeks and resulted in a large and random
sample comprising more than 20,000 unique senders
(i.e., more than 5,000 senders in each test group)
sharing more than 5,000 unique deals. The number of
recipients who were exposed to the deals in our
study period exceeds 50,000 (because a sender may
share a deal with multiple recipients). The data for our
study come from customer-to-customer email shares/
referrals through the platform. For every firm-mediated
email share, we record the unique hashed identifier of
the sender (customer ID), the recipient (hashed email
address), the shared deal, and the assigned test group.
We record all recipients whom the sender specifies in the
batch of sent messages, the timestamp of the share, and
the purchase and referral decisions of each recipient. We
further augment the preceding main data set with his-
torical data on sender’s and recipient’s purchase his-
tory, the interactions between them, and detailed
characteristics of the deals (price, category, popularity,
etc.). The resulting data set enables us to analyze the
impact of message design at both the aggregate and
granular levels (i.e., heterogeneous treatment effects or
moderator effects of sender, recipient, deal, and social-
tie characteristics). To control spillover, we follow the
procedures in Online Appendix B and remove recipi-
ents who are exposed to more than one sender or more
than one type of message during our experiment
(consisting of less than 4% of our sample).
6. Model Specification
To identify the effect of each information compo-
nent in a sender’s shared message on the social
contagion outcomes (i.e., recipient’s purchase and
further successful referrals), we estimate models at
the recipient level (linear probability, probit, and logit
Sun, Viswanathan, and Zheleva: Social Contagion and Firm-Mediated Message Design
Management Science, Articles in Advance, pp. 1–20, © 2020 INFORMS
for recipients’ purchase and ordinary least squares
(OLS), Poisson, and negative binomial model for num-
ber of recipients’ further successful referrals) using the
following specification (Equation (1)). A similar strat-
egy is widely used in field experiment studies in
economics and marketing, as illustrated in Duflo et al.
(2007) and Duflo et al. (2011).
Equation (1) (Recipient-Level Model to Estimate the Effect
of Message Design).
∑ group indicator and estimate the model at recipi-
Yijk
α + βg × Tg + errorijk ,
∑
Yijk
α + βg × Tg + SenderCharj + DealChark
+ RecipientChari + SocialTieCharij + errorijk . (1)
Yijk indicates individual i’s binary purchase decision
after receiving sender j’s share on deal k. We also use it
to indicate the recipient’s further successful referrals
and the recipient’s feedback about the consumption
experience. As elaborated on in Online Appendix B, in
our experimental data, each sender at most shares one
deal during the experiment period (with one or multiple
recipients), but each deal may be shared by multiple
senders. Thus, deal k can be perfectly inferred from
sender index j. Therefore, Yijk can be simplified to Yij.
The dummy variable Tg indicates the test group to
which that sender is assigned. The omitted category
is usually the baseline message (C) in most of the
cases, but later we also use treatment groups (T1 or T2) as
the baseline to identify the attenuation effect in re-
cipient’s purchase (T3–T1) and that in the recipi-
ent’s referrals (T3–T2). Variable SenderCharj indicates
sender-level characteristics, including sender’s past
purchases and account length; DealChark indicates all
deal control variables, including price of the deal,
category of the deal, and popularity of the deal;
RecipientChari indicates all recipient characteristics,
including recipient’s past purchases and the account
length; And SocialTieCharij indicates the social-tie
strength between the sender and the recipients based
on sharing history. The errorijk is clustered at the deal
level (and we also tested an alternative clustering
structure at the sender level, as discussed in Section 7).
In addition, we perform robustness checks and run
regressions (OLS, Poisson, and negative binomial) at
the sender level using the following specification
similar to Duflo et al. (2007):
Equation (2) (Sender-Level Model to Estimate the Effect of
Message Design).
∑
Yjk
+ βg × Tg + errorjk 
∑ Purchase and Further Successful Referrals
Yjk
+ βg × Tg + SenderCharj + DealChark + errorjk .
(2)
9
Here Yjk indicates the total number of recipients’
purchases from sender j’s share of deal k. Later, we
also use it to indicate alternative sender-level out-
comes such as net profits resulting from each sender’s
referral or the total number of a recipient’s further
referrals that originate from the sender. The error
term errorjk is again clustered at the deal level.
To further estimate how the effect of message de-
sign is moderated by user and deal characteristics,
we interact the moderating variables with the test
ent level using the following specification (Duflo
et al. 2011):
Equation (3) (Recipient-Level Model on the Moderation
Effects of User and Deal Characteristics).
∑ ∑
Yijk
α + βg × Tg + βm × ModeratingVarijk,m
∑
+ γm × Tg × ModeratingVarijk,m
+ SenderCharj + DealChark + RecipientChari
+ SocialTieCharij + errorijk , (3)
where ModeratingVarijk,m denotes the mth moderating
variables included in the model. As discussed in
Sections 1 and 2, we theorize and construct a series of
moderator variables such as recipient’s past experi-
ence, the deal characteristics, and social-tie strength.
We use binary indicators to represent all moderator
variables to simplify the interpretation of modera-
tion effects and the discussion of related manage-
rial implications. Our results are robust under an
alternative definition and measure for moderator
(see Online Appendix A4, e.g., continuous measure;
Irwin and McClelland 2003). Please see more dis-
cussion in Section 7.
7. Empirical Findings
We provide descriptive statistics in Table 1. As a
check of randomization, Table 1 presents the tests of
equality of sender, recipient, deal, and social-tie cova-
riates across the four test groups. The sample is well
balanced across all the covariates, indicating that our
randomization is at work (also see temporal distribution
in Figure A1 in Online Appendix A). We closely follow
the framework and order of Section 2 and first present
our main findings on the effect of different message
designs on recipient’s purchase decision and fur-
ther successful referrals (Figure 2, Hypotheses 1 and
Hypotheses 2).
7.1. Effect of Message Design on Recipient’s
We estimate the effect of message design on recip-
ient’s purchase using models at both the recipient
 Sun, Viswanathan, and Zheleva: Social Contagion and Firm-Mediated Message Design
10 Management Science, Articles in Advance, pp. 1–20, © 2020 INFORMS

Table 1. Descriptive Statistics and Randomization Check

Treatment group Treatment group Treatment group

Control 1 2 3
p-Value
Characteristics Mean SD Mean SD Mean SD Mean SD (C = T1 = T2 = T3)

Sender characteristics (N = 5,626) (N = 5,684) (N = 5,687) (N = 5,643)

Total number of past purchases 7.352 9.335 7.288 9.305 7.197 9.115 7.532 9.488 0.269
(before test)
Total spending (before test) 285.9 458.1 289.0 471.4 279.9 428.8 296.7 445.7 0.255
Days after creating account 899.8 422.2 900.3 422.4 893.5 425.7 913.3 424.3 0.587
Shared deal characteristics (N = 1,457) (N = 1,493) (N = 1,529) (N = 1,492)
Average price 45.7 123.1 47.3 120.6 45.3 103.1 46.2 117.9 0.815
Popularity 740.5 1571 705.7 1319 685.2 1243 720.5 1362 0.181
Category dummy
Restaurant 0.189 0.391 0.193 0.394 0.197 0.398 0.193 0.395 0.722
Entertainment 0.365 0.481 0.364 0.481 0.349 0.477 0.358 0.480 0.279
Fast-food/QSR 0.027 0.163 0.024 0.154 0.025 0.156 0.026 0.160 0.709
Home service 0.087 0.281 0.083 0.276 0.079 0.27 0.083 0.276 0.536
Retail product 0.033 0.18 0.038 0.192 0.032 0.177 0.038 0.191 0.197
Active/fitness 0.154 0.361 0.145 0.353 0.152 0.359 0.150 0.357 0.598
Beauty/spa/massage 0.101 0.301 0.105 0.308 0.112 0.321 0.104 0.306 0.136
Escape 0.044 0.206 0.046 0.209 0.048 0.214 0.046 0.210 0.836
Recipient characteristics (N = 13,161) (N = 13,746) (N = 13,509) (N = 13,548)
Total number of past purchases 2.325 6.331 2.303 6.278 2.231 5.928 2.286 6.276 0.639
(before test)
Total spending in USD (before test) 89.1 283.4 87.4 265.6 85.8 257.4 85.7 255.2 0.688
Days after creating account 546.9 512.8 552.0 513.6 550.4 511.4 554.4 514.4 0.698
Social-tie characteristics
Number of past deal shares 0.505 1.024 0.514 1.033 0.497 1.005 0.490 1.007 0.231
between a pair
Percentage of reciprocal ties 0.08 0.271 0.077 0.266 0.076 0.264 0.076 0.265 0.621

Note. QSR, quick-service restaurant; USD, US dollars; SD, standard deviation.

level (Equation (1)) and the sender level (Equation (2)).
At the recipient level, the outcome variable is the re-
cipient’s binary purchase decision (see Figure 3 for an
example). At the sender level, the outcome variable is
the number of recipients’ purchases from the share of
each sender. To maintain consistency between treatment
effects and moderation effects, we mainly use the
recipient-level model to present our empirical find-
ings (Tables 2 and 3). We use the sender-level model
to provide robustness checks and to deliver addi-
tional insights on the effect of message design on net
profits (Table 4).

Table 2. Effect of Message Design on Recipients’ Purchase Decision (Corresponding

Equation: Equation (1))

Whether the recipient makes a purchase or not

Linear probability model

Outcome Linear probability model with deal fixed effect

Model
T1–C 0.0116** 0.0130*** 0.0118*** 0.0136***
T2–C −0.00362 −0.00242 −0.00282 −0.00221
T3–C 0.00250 0.00330 −0.00159 0.000116
Sender controls No Yes No Yes
Deal controls No Yes No Yes
Recipient controls No Yes No Yes
Social-tie controls No Yes No Yes
Observations 53,964 53,964 53,964 53,964
Negative interaction on purchases
(T3–T1) −0.0091* −0.0097** −0.0134*** −0.0135***

Notes. Please see the detailed coefficients for sender, deal, recipient, and social-tie controls in Tables A1, A5,
and A6 in Online Appendix A. Tables with full information (e.g., p-values and standard deviations) are also
available upon request.
*p < 0.1; **p < 0.05; ***p < 0.01.
Sun, Viswanathan, and Zheleva: Social Contagion and Firm-Mediated Message Design
Management Science, Articles in Advance, pp. 1–20, © 2020 INFORMS 11

Table 3. Effect of Message Design on Recipients’ Further Successful Referrals

(Corresponding Model: Equation (1))

Number of recipients’ further successful

referrals

OLS with deal fixed

Outcome OLS effect

Model
T1–C 0.00328 −0.00294 −0.00107 −0.00566
T2–C 0.0414** 0.0417** 0.0532** 0.0569**
T3–C −0.00198 −0.00477 −0.00580 −0.00720
Negative attenuation on further successful referrals −0.0434** −0.0464** −0.0590** −0.0641**
(T3–T2)
Sender controls No No No No
Deal controls No Yes No Yes
Recipient controls No Yes No Yes
Social-tie controls No Yes No Yes

Note. OLS, ordinary least squares.

**p < 0.05.

Our experiment generates four main findings on the purchase (Kornish and Li 2010), embedding addi-
treatment effects, corresponding to Hypotheses 1a, 1b, 2a, tional components into the message can still lead to an
and 2b. First, compared with the baseline mes- incremental improvement. In other words, from the
sage (C), simply adding information about the sender’s recipient’s perspective, the sender’s purchase deci-
purchase status (T1) leads to a large increase in the sion and WOM recommendation may embody dif-
recipient’s purchase likelihood (p(T1 = C) < 0.01; Hy- ferent signals and complement each other. Second,
pothesis 1a supported). The regression results fur- and interestingly, once information about the post-
ther confirm the t-test (Table 2, column (2), p < 0.01 purchase referral reward is provided in addition to
with control; Table 4, column (2), p < 0.01 with con- information on the sender’s purchase status (T3), the
trol). The increase is statistically significant and eco- increase in the recipients’ purchase likelihood is at-
nomically sizable (an 11% increase in the recipient’s tenuated (T3-T1 < 0, p(T3 = T1) = 0.017; Hypothesis 1b
purchase likelihood compared with the control supported), and the difference from control becomes
group). Such an additional increase over the baseline insignificant (p(T3 = C) = 0.52). The regressions further
message is highly remarkable given the very large confirm the t-test results (Table 2, p(T3 = T1) = 0.04
number of shared messages per year (approximately with control; Table 4, p(T3 = T1) = 0.03 with control).
millions) and the very low cost of message design The attenuation effect caused by adding referral
(approximately no cost). It is also theoretically sig- reward information (T3–T1) is sizable and statisti-
nificant and indicates that even though the base- cally significant (amounting to removing 81% of the
line WOM communication already provides a strong lift in T1–C originating from adding the sender’s
signal and is effective in driving the recipient’s purchase). This finding is consistent with previous
work (Verlegh et al. 2013) on the recipient’s inference
Table 4. Effect of Message Design on the Recipients’ about the sender’s credibility/motivation. Once the
Purchases and Overall Net Profits, Measured at the Level of recipient realizes that the sender may be eligible for
Each Sender (Corresponding Model: Equation (2)) a referral reward (after simultaneously receiving in-
formation about the postpurchase referral reward and
Net profits brought the sender’s purchase status), he or she may question
by each sender’s the credibility of the referral or infer ulterior motives
Number of recipients’ referrals (referred
purchases from the revenue-referral from such sharing (Tuk et al. 2009).
Outcome sender’s referrals cost) Third, adding information about referral rewards may
increase recipients’ awareness of the monetary reward
T1–C 0.0366*** 0.0312*** 1.489** 1.392**
and raise the number of further successful referrals
T2–C −0.00467 −0.00526 −0.208 −0.243
T3–C 0.0127 0.00837 1.004 0.939 they are making (Hypothesis 2a). We observe such a
Sender controls No Yes No Yes response in our experiment (Table 3). On average, re-
Deal controls No Yes No Yes cipients who are exposed to messages with only the
Recipient controls No No No No referral reward information (T2) make 53% more suc-
Social-tie controls No No No No
cessful referrals compared with recipients in the con-
**p < 0.05; ***p < 0.01. trol group (p(T2 = C) = 0.03; Hypothesis 2a supported).
 Sun, Viswanathan, and Zheleva: Social Contagion and Firm-Mediated Message Design
12
The regression results further confirm the t-test
(Table 3, columns (1) and (2); p = 0.035 without control
and p = 0.029 with control). Interestingly, recipients
who receive the message with both pieces of infor-
mation are much less likely to make further successful
referrals compared with the group with only informa-
tion about referral rewards (i.e., T3–T2 < 0, p(T3 = T2) =
0.021; Hypothesis 2b supported). The regression re-
sults are consistent (Table 3; p(T3 = T2) = 0.032 with-
out control, p(T3 = T2) = 0.013 with control). Such a
decrease in further successful referrals may be due to
the concern about one’s own image in sharing (Ryu
and Feick 2007, Wirtz et al. 2012), because the friends
who receive the message with both information com-
ponents may immediately infer their own eligibility
for getting a referral reward and thus raise concern
about their motive.
We run a series of robustness checks to make sure
that our results are valid under a range of conditions.
First, our findings remain robust under alternative
models at both levels, including Poisson and negative
binomial models for recipients’ further successful
referrals and probit and logit models for recipients’
purchase (Tables A2 and A8 in Online Appendix A).
The treatment effects on recipients’ purchase and fur-
ther successful referrals are statistically more signif-
icant under those models. Second, our main findings
on treatment effects also remain qualitatively similar
(and quantitatively similar in magnitude) under the
sender-level model (Table 4, columns (1) and (2) and
Table A7 in Online Appendix A). But the treatment
effect is less statistically significant than the recipient-
level model, which is consistent with a smaller sample
size in the sender-level model. The reader should still
interpret this with caution. Third, the recipients who
share the same sender might be similar because of
homophily. Thus, we also run a regression with errors
clustered at the sender level or sender–deal level
(Table A4 in Online Appendix A; Cameron and Trivedi
2005). The standard deviations from all these models
are smaller than those in current model (i.e., clus-
tering at the deal level). Our results are more sig-
nificant under alternative clustering. Fourth, cus-
tomers share a wide range of deals in our experiment
(following a long-tail distribution). For some of the
deals, the number of senders is very small. Even
though the deals are randomized into one of the four
groups and the number of deals is very large in our
test, it is still possible (though unlikely given the large
sample size) that our estimates can be biased if some
of the “good” deals are all randomized into the same
group (we define a deal as good if the treatment can lead
to an increase in purchases for the deal). Thus, we run the
models with deal fixed effects and take advantage of
within-deal variation for our identification (columns (3)
and (4) in Tables 2 and 3). The results are consistent
Management Science, Articles in Advance, pp. 1–20, © 2020 INFORMS
(and even more significant) after we include deal
fixed effects. Fifth, we also perform the main effect
using an alternative model employing a two-by-two
representation (two message components and their
interactions rather than T1–T3). The results are robust
(Table A1 in Online Appendix A; with detailed ex-
planations on the rationale behind our choice of
current representation in Online Appendix A1). Fi-
nally, we examine the out-of-bound issue in the linear
probability model (Horrace and Oaxaca 2006) and
ensure that our results are robust after corrections
(Table A6 in Online Appendix A).
We also want to note that we were following tra-
dition in the information systems and economic lit-
erature and consider conventional thresholds for
statistical significance, p < 0.05 (Lin et al. 2013, Burtch
et al. 2017). However, one might also need to carefully
consider the potential issue of multiple testing19 when
interpreting the statistical significance of the results,
especially for those with a p-value smaller but close
to 0.05. Applying a Bonferroni correction to account
for multiple comparisons would have relatively little
impact on our hypothesis tests; Hypotheses 1a, 1b,
and 2b would continue to be supported with strong
confidence (as revealed by the consistently low p-value
from t-tests and the results from a range of alterna-
tive models), whereas Hypothesis 2a on the effect of
message design on further successful referrals would
be weakly supported.
As discussed earlier, we find that a simple variation
in message design can greatly enhance social conta-
gion (Figure 2). On the one hand, adding information
about the sender’s purchase (T1) significantly in-
creases the recipient’s likelihood of purchase. On the
other hand, adding information about the referral reward
alone (T2) increases the recipient’s successful referrals.
Both effects are economically significant. However,
because of the negative attenuation effects when the
two message components are put together, the firm
cannot achieve the best outcome and increase the recip-
ient’s purchase and successful referrals at the same time.
Therefore, the firm faces a tradeoff: whether to encourage
adoption (through T1) or diffusion (through T2). We
build a model (detailed in Online Appendix C) and show
that the firm should increase adoption when the baseline
adoption rate is relatively low (as in our case, ~10%) but
may choose the message that encourages diffusion
when the baseline adoption rate is relatively high (e.g.,
free products, content, and apps). Based on the model and
parameters estimated from our data, we identify the
message design that would lead to the highest increase
in the total number of adoptions (combining recipients’
purchases and successful referrals)—T1, adding in-
formation about sender’s purchase only.
With the increase in recipients’ purchases and re-
ferrals, the firm may incur an additional cost in the
Sun, Viswanathan, and Zheleva: Social Contagion and Firm-Mediated Message Design
Management Science, Articles in Advance, pp. 1–20, © 2020 INFORMS
form of sender’s referral reward. Thus, we examine
the net profit the firm can gain by aggregating net
revenue and cost from referrals at the sender level
(i.e., total profits from all the recipient’s purchases
and further referrals minus the sender’s referral re-
ward). Consistent with previous results, we find that
adding information about the sender’s purchase leads
to a large increase in the net profits for the platform,
after accounting for the cost of referral rewards:
~$1.5 increase from each sender (Table 4, columns (3)
and (4), p(T1–C) = 0.028 without control and 0.032
with control). The increase is significant given the
large volume of senders per year (i.e., few million).
7.2. Mechanisms Underlying the Effectiveness of
Message Design
Having identified the treatment effects at the aggre-
gate level, we further examine how the effectiveness
of message design varies across different situations
by exploring the heterogeneity in treatment effect
on different types of deals, different types of recipi-
ents and senders, and across social ties with different
strengths. The moderator effects will reveal when certain
message designs would work best and provide addi-
tional insights into the contagion mechanisms underly-
ing the process. As elaborated by Iyengar et al. (2015),
the multiple moderator effects, though not causal, would
provide strong evidence of underlying mechanisms.
Because there are a large number of characteristics
at different levels, we choose to examine moderator
effects as guided by social contagion mechanisms
studied in previous literature (Cai et al. 2009, Qiu et al.
2015, Lee et al. 2015). As discussed in Section 2 (Hy-
potheses 3 and 4), two mechanisms—social learning
and social utility—may be at work in driving the
increase in the recipient’s purchases. If social learning
is at work, we should see a larger increase in pur-
chases for less-experienced users when they observe
their friend’s purchase because they may place more
weight on the new information relative their own
knowledge (Banerjee 1992). Similarly, we should see
an increase in purchases for recipients who receive
messages about less-popular deals and who receive
messages about deals that are in the earlier stage of
the deal sales cycle (Qiu et al. 2015). On the other
hand, if social utility is at work, we should see a larger
increase in purchases for recipients of “social” deals
because they can gain additional social utility from
their friends’ participation (Katona et al. 2011). Those
user- and deal-level constructs are motivated from
different theories and represent different mechanisms
and, thus, are less likely to be correlated with each
other. Correlation analysis between moderators in-
deed confirms the conjecture and supports our choice
(the pairwise correlation among the moderators is
generally smaller than 0.04).
13
Our rich data set allows us to test the hypotheses
and reveal the underlying mechanisms. We construct
measures for recipient experience, deal popularity,
the stage of the deal’s sales cycle, and the “social-
ness” of the deal in the following way. First, using the
complete purchase history of recipients from the time
they join the platform, we are able to identify whether
the recipient has purchase experience on the platform.
We define a recipient as experienced if he or she has
made at least one purchase in the past. We also ex-
amine alternative measures for recipient experience
(e.g., user tenure). Second, we define deal popularity
based on deal sales within each category. If the deal
sales are within the top 50th percentile of all shared
deals in our experiment, we categorize it as popular; if
the deal sales are within the bottom 50th percentile,
we categorize it as unpopular. Third, because we
observe the timing of each purchase for every deal in
our experiment (including purchases from nonsharing
channels), we can calculate the percentage of sales that
have occurred for the deal when it is shared with the
recipient. We define a recipient as an early customer if he
or she received the share in the early part (initial 50%) of
the deal sales cycle. Finally, the shared deals in our
sample range across 8 categories and 92 subcategories
(including restaurant, entertainment, fast-food/desserts,
home service, retail products, active/fitness, beauty/spa,
and escape at the category level). Two coders indepen-
dently go over the deals in each subcategory. Based on the
nature of the subcategory (whether it involves a group
activity or not and whether friends can redeem the deal at
the same time or not;20 Hartmann 2010), the coders code
and classify the subcategory into social versus nonsocial
subcategories. Cronbach’s alpha equals 0.88 (above
typically acceptable thresholds of 0.7), and the raters
agree on the categorization of 84 of the 92 subcate-
gories (91.3% agreement). The coders then examined
the remaining eight subcategories together and made
a final decision. We report the main results based on
subcategory-level coding. We also test alternative
categorization for each of the preceding constructs
using alternative cutoff points and more granular
measures (Online Appendix A4). Our results are ro-
bust across alternative definitions of each moderator
(Tables A9–A11 in Online Appendix A) and under
alternative coding (Table A13 in Online Appendix A)
and alternative specifications (e.g., Table A12 in Online
Appendix A, with fixed effects).
We conduct our analysis at the recipient level and
interact each of the preceding moderating variables
with the indicator of treatment group while con-
trolling for all other factors (Equation (3) in the em-
pirical strategy). The results are presented in Table 5.
First, we find that the effect of adding information
about the sender’s purchase status (T1–C) varies
across the different types of individuals and deals.
 Sun, Viswanathan, and Zheleva: Social Contagion and Firm-Mediated Message Design
14 Management Science, Articles in Advance, pp. 1–20, © 2020 INFORMS

Table 5. Effect of Message Design Moderated by User and Deal Characteristics: Evidence
of Social Learning and Social Utility (Corresponding Model: Equation (3))

Recipients’ purchase decision (0/1)

(measured at recipient level)

T1–C (effect of adding T3–T1 (attenuation effect

sender’s of adding referral
Outcome purchase status) reward)

Treatment effect 0.0288*** 0.0287*** −0.0344*** −0.0348***

Recipients’ experience 0.119*** 0.152*** 0.0913*** 0.0959***
Treatment × recipients’ experience −0.0278** −0.0286** 0.0291** 0.0274**
Deal popularity 0.0343*** 0.0363*** 0.0125* 0.0139*
Treatment × deal popularity −0.0218** −0.0227** 0.0207** 0.0210**
Late stage in deal lifecycle 0.0114* 0.0112* −0.00592 −0.00466
Treatment × late stage in deal lifecycle −0.0173** −0.0171** 0.0242*** 0.0217***
Social deal 0.0281*** 0.0148 0.0442*** 0.0326***
Treatment × social deal 0.0160** 0.0169** −0.0113 −0.0103
Sender controls No Yes No Yes
Deal controls No Yes No Yes
Recipient controls No Yes No Yes
Social-tie controls No Yes No Yes

Note. The definition and measure of each moderator is illustrated in Section 7.2.
*p < 0.1; **p < 0.05; ***p < 0.01.

Information about the sender’s purchase has a larger
and more significant effect on recipients who are less
experienced, on less popular deals, and on deals in the
earlier stages of the deal sales cycle (negative and
significant interaction terms in columns (1) and (2) of
Table 5; p < 0.05 for all three terms; Hypothesis 3a
supported). Second, the incremental attenuation ef-
fect of information about referral rewards on recipi-
ent’s purchase (T3–T1) is larger and more significant
for the situations described earlier (columns (3) and (4)
of Table 5; p < 0.05 for all three interaction terms;
Hypothesis 3b supported). The empirical findings in
Table 5 are consistent with the notion that social
learning might be at work in the instances with higher
uncertainty for the recipient, and sender’s credibility
is crucial in the learning process. By contrast, we also
find some evidence that social utility also plays a role
(Table 5). When information about a friend’s purchase
is revealed to the recipient, the increase in the re-
cipient’s purchase is higher and more significant for
social (versus nonsocial) deals (p((T1–C) × social
deal > 0) < 0.05; Hypothesis 4a supported). This is
consistent with the explanations that the recipient
may enjoy additional utility from a friend’s partici-
pation in the event. In addition, we did not find any
difference in the attenuation effect between social
versus nonsocial deals (p((T1–C) × social deal > 0) = 0.21;
Hypothesis 4b supported). This is expected given the
nature of social utility discussed in Hypothesis 4b.
In summary, our results, consistently supported by
a series of moderator effect analyses, indicate that
senders serve two important roles in the social con-
tagion process: they serve as credible sources of in-
formation to their social connections and facilitate
social learning, and they also serve as companions
and confer social utility to the recipients for social
product and events. Appropriate message design
may help strengthen the role of the sender in both
these processes.
7.3. Additional Evidence for Social Learning and
Social Utility: Social-Tie Strength
We further explore the heterogeneity in the treatment
effect, which may help us better understand the un-
derlying mechanisms at work. There are several im-
portant variables that would further moderate the effect
of message design, including the social-tie strength
between the sender and recipient, the “target-iveness”
of the sender’s share, and the recipients’ past expe-
rience with referrals. We focus on the discussion of
social-tie strength because of its prominent role in the
literature (Aral and Walker 2014, Bapna et al. 2017)
and refer readers to Online Appendix A5 for addi-
tional analyses on other moderators. Tie strength may
moderate both social learning and social utility.21 On
the one hand, the recipient can learn more from a
friend with a stronger social tie because he or she
places more trust when observing a purchase from
such friend (Cai et al. 2015, Bapna et al. 2017). Thus,
we should observe a larger increase when the sender’s
purchase is added to the message (T1–C). For a similar
reason, the attenuation effect (T3–T1) should be smaller
in such a case (Verlegh et al. 2013, Hong et al. 2016).
On the other hand, if the shared deal is a social
deal, the recipient may gain additional utility from
consuming the deal with a closer friend (Katona
et al. 2011).
Sun, Viswanathan, and Zheleva: Social Contagion and Firm-Mediated Message Design
Management Science, Articles in Advance, pp. 1–20, © 2020 INFORMS 15

We construct the measure for social-tie strength
using the sharing history between sender and re-
cipient since the beginning of the platform. If the
historical share within a pair is reciprocal (i.e., both
parties have sent and received shares from the other
party), then we define the tie strength of the pair as
strong (Granovetter 1973); otherwise, the tie strength
is considered weak.22
Table 6 illustrates the additional results on hetero-
geneity in treatment effect by examining the moderation
effect of tie strength using the same model specification
as discussed earlier (Equation (3)). We find that the
strength of the social tie between a sender and a re-
cipient significantly moderates the treatment effect of
different message designs. Adding information about
the sender’s purchase leads to a significantly higher
lift in purchases for sender–recipient pairs with strong
ties compared with those pairs with weak ties (posi-
tive interaction term for (T1–C) × tie strength in
Table 6, p((T1–C) × strong tie) = 0.029 without control
and 0.017 with control). The moderation effect of tie
strength is economically significant: showing infor-
mation about the sender’s purchase to a recipient who
shares a strong tie will lead to a 37% increase in the
recipient’s purchase likelihood! (In contrast, showing
the sender’s purchase leads to an 8% increase for a
recipient sharing a weak tie with the sender.) This
indicates the importance of tie strength because of
both social learning and social utility. More inter-
estingly, we find that for WOM sharing between re-
ciprocal ties, there is no negative attenuation effect
when adding the referral reward (positive interaction
term (T3–T1) × tie strength in Table 6; p((T3–T1) ×
strong tie) = 0.021 without control and 0.02 with
control). Thus, for strong ties, firms may leverage
message design to increase the recipient’s purchase
and referrals at the same time by including infor-
mation about the sender’s purchase and referral re-
ward. Such a finding is aligned with the notion that
trust can be sustained by strong ties and repeated
interactions (Bapna et al. 2017), and there is little
credibility concern between individuals with a strong
tie (Verlegh et al. 2013). As discussed in Verlegh et al.
(2013), recipients with prior interaction experience
with (and thus more knowledge of) the sender may be
less likely to infer an ulterior motive and place more
trust in the WOM communication process.
7.4. Effect of Message Design on
Customer Experience
Finally, we explore the welfare implications of mes-
sage design. Although social learning may lead to
more purchases and benefit the firm, it may, never-
theless, lead to irrational herding and harm customers
(Banerjee 1992). Social utility, by contrast, is always
welfare enhancing. Thus, overall, it is not clear whether
the optimal message design for the firm (T1) would
also lead to a higher satisfaction of customers after
consumption. We measure customer satisfaction using
automated customer surveys sent by the platform on
the customer’s redemption of a voucher. The survey
is simple and includes a question on customer sat-
isfaction: thumbs up or thumbs down for your visit.23
The automated email survey is sent out only if the
merchant has reported a customer’s redemption of a
voucher or if the customer labels his or her voucher as
used. Thus, the final data we have from the automated
survey are determined by two factors: (1) the mer-
chant’s report (or a customer’s self-report) of deal
voucher redemption and (2) the response rate to the
emails sent out. The final recipients who have pro-
vided feedback are slightly less than 10% of the

Table 6. The Moderator Effect of Social-Tie Strength on the Effectiveness of Message

Design on Recipients’ Purchase (Corresponding Model: Equation (3))

Recipients’ purchase decision (measured at recipient level)

T1–C (effect of adding T3–T1 (attenuation effect of

Outcome sender’s purchase status) adding referral reward)

Treatment effect 0.00919** 0.00849** −0.0116*** −0.0121***

Strong tie 0.0112 −0.0150 0.0428*** 0.0202*
Treatment × strong tie 0.0316** 0.0344** 0.0336** 0.0329**
Sender controls No Yes No Yes
Deal controls No Yes No Yes
Recipient controls No Yes No Yes

Notes. The social-tie strength is constructed by using the sharing history between sender and recipient
since the beginning of the platform. If the historical share within a pair is reciprocal (i.e., both parties
have sent and received shares from the other party), then we define the tie strength of the pair as strong
(Granovetter 1973); otherwise, the tie strength is considered weak. The results are robust under al-
ternative measures of tie strength such as the existence of historical sharing (Table A10 in Online
Appendix A).
*p < 0.1; **p < 0.05; ***p < 0.01.
 Sun, Viswanathan, and Zheleva: Social Contagion and Firm-Mediated Message Design
16
total purchasers. The sample size in each test group is
approximately the same. Table 7 illustrates the differ-
ence in customer feedback across the four groups at the
aggregate level and decomposed into social deal versus
nonsocial deal. We find suggestive evidence that re-
cipients who receive the message with only the sender’s
purchase information (T1) are more likely to report a
positive experience (thumbs up; p(T1 = C) = 0.052). This
increase is larger in magnitude for social deals than
for nonsocial deals (but not statistically significant),
suggesting that social utility might play a role in
customer satisfaction. Interestingly, in our context,
the optimal message design, with sender’s purchase
information, also improves both firm profits and
customer welfare over the control message.
8. Discussions and Conclusion
Of all the various aspects of WOM communication—
including the sender, recipient, social tie between the
sender and the recipient, channel of communication,
and the message—that drive the effectiveness of word
of mouth in creating social contagion, the message is
the primary component that actually transmits social
contagion. Firms today have an unprecedented ability to
mediate and directly intervene in the online WOM
process and actively design the message shared by
users. Despite the growing importance of message
design in creating social contagion, there is very little
understanding of how different components of a mes-
sage impact social contagion outcomes. Our study is
among the first to address this issue by providing an
operational framework to identify optimal message
design based on two key outcomes in social contagion:
recipient’s purchase and referrals. Although the de-
sign of messages is often open ended and done in an
ad hoc fashion, our study proposes a new experi-
mental intervention and demonstrates how firms can
use a field-experiment framework to identify the
impact of different components of a message and
optimally combine them based on patterns of recip-
ients’ purchases and further referrals. Depending on
Table 7. Customer Feedback After Consuming the Deal:
Welfare Implication of Message Design (Corresponding
Model: Equation (1))
Recipients’ response to “How do you rate your
experience with the deal?” (thumbs up = 1,
thumbs down = 0)
Outcome: All Stand-alone deal Social deal
T1–C 0.0845* 0.0449 0.119*
T2–C 0.0535 0.0274 0.0696
T3–C 0.0185 −0.0533 0.0864
Observations 419 209 210
*p < 0.1.
Management Science, Articles in Advance, pp. 1–20, © 2020 INFORMS
the context and the nature of the product, firms may
identify other message components as important de-
terminants in driving social contagion outcomes. Our
study serves as the first to build the framework and
paves the way for firms to conduct a structured search of
optimal message design to enhance social contagion.
We first examine the impact of two important
informational components—information about the
sender’s purchase of the product and information
about the referral rewards for the sender—in influ-
encing the effectiveness of a referral message. We
identify an interesting tradeoff between customer’s
purchase and referral outcomes when the two in-
formation components are embedded in a WOM
communication (summarized in Figure 2). Because
the firm cannot attain the sweet spot of increasing
both the recipient’s purchase and further referrals, it
faces a tradeoff between encouraging more purchases
versus further referrals. We show that such negative
tradeoffs would be especially strong or weak under
certain conditions (e.g., moderated by tie strength)
and also discuss potential underlying mechanisms.
We speculate that such a tradeoff would be very robust
when monetary rewards are offered to increase cus-
tomers’ referrals.24 We build a model and identify the
optimal message design (T1, with information about the
sender’s purchase only). Implementation of optimal
message design by the platform across all markets in
North America has led to a significant increase in net
profits from sharing, even after accounting for the
cost of referral rewards (~$1.5 increase in net profits
from each sender’s referrals; projected increase in net
profits over US$1 million per year).
Identifying optimal design of firm-mediated mes-
saging at an aggregate level is a useful first step. With
the availability of a large amount of data on sender and
recipient behaviors and their historical interactions
and the ability to process requests in real time, firms
can actually personalize message design at a sender–
recipient level. Although personalization is a common
practice in the context of firm–customer interactions,
personalization of firm-mediated customer–customer
social interactions is still in its infancy. As an im-
portant step in this direction, our study examines
various moderators to shed light on the variations
in treatment effects for different types of senders,
recipients, strength of ties, and products (Tables 5
and 6). We envision that in the near future when a
firm gets a request for email share from a sender to
a recipient, it would leverage historical information
to extract product characteristics and sender’s and
recipient’s purchase and interaction histories, calcu-
late optimal message design, and deliver the mes-
sage in real time in a personalized fashion.25 Our
work serves as a valuable proof of concept of this
impending development.
Sun, Viswanathan, and Zheleva: Social Contagion and Firm-Mediated Message Design
Management Science, Articles in Advance, pp. 1–20, © 2020 INFORMS
Although the field experiment enables us to iden-
tify how message components influence social con-
tagion, our rich data set also enables us to explore the
underlying mechanisms at work. First, we find that
embedding information about a sender’s purchase in
natural word of mouth can lead to an additional in-
crease in a recipient’s purchase. We examine the two
primary mechanisms behind such positive impact
and find suggestive evidence that both social learning
and social utility may be at work, albeit to different
degrees in different situations. Second, we find that
the presence of referral rewards may attenuate social
learning but not social utility. Overall, our findings
suggest the two key roles played by friends—they
can serve as sources of information (social learning)
or provide companionship and shared experience
(social utility). Distinguishing between these under-
lying mechanisms of social contagion is important not
only from a theoretical perspective but also from a
practical perspective. If social learning is the primary
mechanism at work, then the firm can adopt alternate
strategies to encourage adoption, such as providing
additional information about the product through cus-
tomer testimony and third-party reviews and offering
guarantees and flexible return policies to reduce uncer-
tainty. By contrast, if social utility is the primary driver of
social contagion (as is more likely to be the case for social
products), the firm can invest in identifying key influ-
encers, adopting appropriate network seeding strategies,
and providing group rewards.
In conclusion, our study represents one of the first
large-scale field experiments to understand the causal
role of message design on the effectiveness of WOM
communication and social contagion at a granular
component level. Our study not only contributes to
our understanding of the mechanisms underlying
WOM communication and the social contagion pro-
cess, but our findings also provide valuable guide-
lines for firms seeking to manage such online social
interactions through message design. The quantita-
tive estimates and qualitative understanding gained
from this series of component-level studies can guide
the optimal design of messages to improve the ef-
fectiveness of social interactions. Small changes to the
message design can be accomplished with very little
cost and effort and promise substantial gains to the
firm. There are several limitations to this study, which
also presents many opportunities for future research.
First, our study focuses on two major message com-
ponents in social commerce when identifying optimal
message design. Future study may build on our frame-
work and search optimal messages in a larger compo-
nent space. Second, the moderator variables are not
controlled in our experiment; thus, their effects could be
confounded. We observe multiple moderator effects
consistent with the social learning and network effect.
17
Future research can further investigate the mechanisms
underlying the effectiveness of message design by cre-
ating exogenous variation in moderators in the labo-
ratory setting. Third, we focus on postpurchase sharing
because we seek to understand the effect of information
about senders’ purchase in message design. In our
context, a large portion of the messages is sent out by
senders postpurchase. Future research may extend
our framework and examine prepurchase sharing.
Finally, stimulating social contagion through mes-
sage design is complementary to other social inter-
ventions, such as targeting opinion leaders (Iyengar
et al. 2015), network seeding and coordination (Dou
et al. 2013, Sun et al. 2019), online review (Duan et al.
2008, Yin et al. 2016, Huang et al. 2018), WOM design
(Jung et al. 2020), social network integration (Huang
et al. 2019), social media engagement (Chen et al. 2015,
Yang et al. 2019), viral product design (Aral and Walker
2011a), viral content design (Berger and Milkman
2012), viral marketing (Schulze et al. 2014), and re-
ferral programs (Schmitt et al. 2011), among others.
It would be valuable to examine how message design
complements these approaches. We hope that our
study serves as a valuable first step for those future
research directions.
Endnotes
1
Each year, millions of product-related messages are shared through
the platform we collaborate with in this study. The platform can vary
the design of those messages. Even a small increase in the conversion
rate of the shared messages would lead to a large increase in net
profits for the platform.
2
We carefully review the literature related to social contagion and
identify two broad streams of research: one on adoption behavior
(Bapna and Umyarov 2015) and the other on referral behavior
(Ryu and Feick 2007, Jung et al. 2020). The adoption literature focuses
primarily on how firms can directly provide information about
others’ adoption in encouraging the focal users’ adoption. By con-
trast, the sharing/referral literature focuses primarily on how firms
can directly provide information about referral rewards to incentivize
more referrals. Our study draws motivation and information inter-
ventions from these two streams of research but focuses on their
effects in an entirely new context—firm-mediated message design.
3
As detailed later, the attenuation effect is defined as the incremental
contribution of adding a message component and is calculated by
using the difference between two test groups (e.g., the effect of adding
referral-reward information is the effect of displaying both message
components minus the effect of displaying only the sender’s pur-
chase). The attenuation effect is different from the interaction effect
between two message components. Rather, it is the net effect of the
new message component plus its interaction effect.
4
Previous studies have focused on a single outcome in social con-
tagion, either the recipient’s purchase (Cai et al. 2015) or the recip-
ient’s referrals (Ryu and Feick 2007). By tracking both outcomes, we
are able to identify a tradeoff between customers’ adoptions and
referrals across message designs and connect two streams of research
in social contagion—that is, peer influence (focusing on adoptions)
and referral marketing (focusing on referrals).
5
Unlike previous studies in which there is no peer influence in the
control group (Cai et al. 2009), in our experiment, there is a strong
 Sun, Viswanathan, and Zheleva: Social Contagion and Firm-Mediated Message Design
18
influence between the sender and recipient, even in the control group.
Thus, identifying whether message design could further enhance
peer influence is more challenging than detecting the existence of
peer influence (Bakshy et al. 2012, Iyengar et al. 2015). Though
previous studies have examined the effect of word of mouth and
information about peer adoption separately (Chen et al. 2011), no
study has examined the effect of information about peer adoption
when it is embedded in WOM communications.
6
Besides social learning and social utility, other mechanisms such as
saliency and conformity might also play a role in the social influence
process. For instance, showing others’ decisions or opinions may cast
additional pressure for action, according to the theory of social
conformity (Asch 1955, Bernheim 1994, Bond and Smith 1996). In
Sections 4 and 6, we provide more discussions on how we control the
saliency mechanism and the potential role of conformity underlying
the effect of message design. We thank one reviewer for the excel-
lent suggestion.
7
Though previous studies have examined the effect of word of mouth
and information about peer adoption separately (Chen et al. 2011), to
the best of our knowledge, no study has examined the effect of in-
formation about peer adoption when it is embedded in word of
mouth (see endnote 4). Hypothesis 1a on the incremental contribution
of the information component in the WOM message is crucial from
both theory and managerial perspectives.
8 and one’s decision could be observed or influenced by many others
To avoid gaming behavior, most businesses (including our collab-
orating platforms) only grant referral rewards to those who have
already purchased the product and make it clear in the referral-
reward introduction that the reward is conditional on “purchase
first” (Section 3). In other words, a user would be eligible to get the
referral reward only if he or she already purchased the deal. How-
ever, because users may share a product with or without a purchase, a
user’s friend cannot immediately infer whether the user has pur-
chased or not based on the share and whether the user is eligible to
enjoy the referral reward or not. When only information about the
postpurchase referral reward is shown in the message, the sender
may enjoy this ambiguity of the message. However, when the in-
formation about the sender’s purchase status is explicitly added into
the message (i.e., message design “showing both information”), there
no longer exists any such ambiguity. His or her friend would know
his or her eligibility to get the referral reward, and he or she cannot
control how his or her friends infer his or her sharing motive.
Consequently, the user is less likely to make further referrals because
of concerns about his or her own image.
9
The message that the recipients would see does not appear in the
pop-up window.
10
Even though the sender may specify multiple recipients in a single
send, each email is sent separately, and hence each recipient receives
the email as a one-to-one personal share. Hence, we define each
sender–recipient pair in a multirecipient share as an independent share.
11
We choose to focus on postpurchase senders because we seek to
understand the effect of information about senders’ purchase status
in the message design. In our context, a large portion of the messages
is sent out by senders after the purchase; thus, the results are
managerially relevant. The effect of message design may be different
if the message is shared by senders prior to purchase because they
may have different motives and follow a different pattern.
12
A fraction of the senders also shares deals through their own
channels (e.g. copy–paste the deal URL into their own social media or
email account), leading to successful referrals. Those senders should
be equally distributed across test groups. Our field experiment focuses
only on senders using the firm’s email channel to make referrals. The
email channel is also the dominant sharing channel on the platform.
13
Most referral-reward programs in the industry are designed for
existing customers who have already made the adoption decision.
Such postadoption referral programs, which only offer referral
Management Science, Articles in Advance, pp. 1–20, © 2020 INFORMS
rewards to adopters, are widely used in different industries, in-
cluding credit-card agencies (e.g., American Express), manufacturers
(e.g., Tesla), internet companies (e.g., PayPal and LivingSocial), and
sharing-economy platforms (Uber and Airbnb), among others.
14
Without information about the sender’s purchase, the recipient
cannot infer whether the sender is eligible to get a referral reward or
not with full certainty (e.g., message with only information about
referral reward).
15
Our randomization approach is different from the series of pre-
vious studies (e.g., Aral and Walker 2011a, b; Bapna and Umyarov
2015), as illustrated in Section 1. Specifically, we vary only the
message content without changing the organic sharing pattern
(i.e., sender’s natural choice of recipients).
16
However, it is very hard to rule out the Stable Unit Treatment Value
Assumption (SUTVA) violation. For example, certain recipients may be
excluded from the experiment if they are cross-contaminated by different
senders. Such exclusion may be biased, because a person with more
friends is more likely to be contaminated. We do our best to mitigate the
concern with experiment design and also robustness checks (see Online
Appendix B). The reader should still interpret this with caution.
17
It is notoriously hard to rule out the conformity (or peer
pressure/norm) channel. Conformity is usually most crucial in a
group environment, where one could observe many others’ opinions
(Asch 1955, Bond and Smith 1996). In our context, conformity might
be of less concern given the one-to-one interpersonal communication
process (no external audience or group activity) and the nature of the
decision (deal purchase, not opinion or review/rating). However,
conformity may still play an important role under certain circum-
stances (e.g., share among strong ties). We discuss this in Section 7.3.
18
Though the referral reward banner is relatively short, it is still
possible that information about the sender’s purchase status would
become less salient in its presence in T2 and T3. We thank one re-
viewer for highlighting this.
19
There is some disagreement in the literature about when and
whether to employ multiple testing corrections (Duflo et al. 2007).
Recent studies suggest that multiple comparisons are specifically
relevant for untheorized tests, such as detecting heterogeneity in the
treatment effect with a very large number of moderators; in contrast,
thoughtful experiment design and preanalysis plan may alleviate the
concerns for multiple testing. Our experiment carefully laid out a
preexperiment plan for design and analysis of the main treatment
effects: each message component is designed to improve one out-
come. In addition, our main effects and moderation effects (Hy-
potheses 1–4) are driven by the same underlying mechanisms, and
the consistent empirical pattern provides further support for the
causal effects (Iyengar et al. 2015). We have added detailed discus-
sions and hypotheses to provide theoretical support for empirical
tests. We sincerely thank one reviewer for this suggestion.
20
We identify the two coding criteria for social versus nonsocial deals
(1) based on our discussion with the experienced managers at the
platform on how the platform categorizes deals in the business de-
velopment process and (2) based on the theoretical definition of
network effects and group behaviors in previous literature (Hartmann
2010, Gilchrist and Sands 2016). The coding process does not involve
user behaviors in the experiment.
21
Social conformity may also play a role in the moderator effect of
social-tie strength. In general, an individual might be likely to con-
form more to the opinion or decision of a strong tie than to that of a
weak tie. We thank one of the reviewers for these suggestions.
22
The results are robust under alternative measures of tie strength,
such as the existence of historical sharing. See discussions in Section 4
and Table A11 in Online Appendix A.
Sun, Viswanathan, and Zheleva: Social Contagion and Firm-Mediated Message Design
Management Science, Articles in Advance, pp. 1–20, © 2020 INFORMS
23
The survey also includes a question on “will you ever return?
(yes/no),” but it is not a direct measure of customers’ satisfaction
with the current deal consumption. The results are qualitatively
similar to those on the customers’ satisfaction.
24
For future research, it would be interesting to examine whether
nonmonetary interventions (e.g., altruistic framing) can be used to
improve referrals without hurting adoptions.
25
Our study is focused on the message design in one-to-one social
communication, but in reality, digital platforms such as Yelp and
Facebook might have the ability to personalize message design in
one-to-many social communication: showing the same post/review
to different users by highlighting different aspects of the message.
Message design in such a public broadcast setting may involve new
considerations such as information spillover and discrimination and
is worth detailed investigation in a separate study.
References
Aral S, Walker D (2011a) Creating social contagion through viral
product design: A randomized trial of peer influence in net-
works. Management Sci. 57(9):1623–1639.
Aral S, Walker D (2011b) Identifying social influence in networks
using randomized experiments. IEEE Intelligent Systems 26(5):
91–96.
Aral S, Walker D (2012) Identifying influential and susceptible
members of social networks. Science 337(6092):337–341.
Aral S, Walker D (2014) Tie strength, embeddedness, and social in-
fluence: A large-scale networked experiment. Management Sci.
60(6):1352–1370.
Aral S, Muchnik L, Sundararajan A (2009) Distinguishing influence-
based contagion from homophily-driven diffusion in dynamic
networks. Proc. Natl. Acad. Sci. USA 106(51):21544–21549.
Asch SE (1955) Opinions and social pressure. Sci. Amer. 193(5):31–35.
Bakshy E, Eckles D, Yan R, Rosenn I (2012) Social influence in social
advertising: Evidence from field experiments. Proc. 13th ACM
Conf. Electronic Commerce (ACM, New York), 146–161.
Banerjee A (1992) A simple model of herd behavior. Quart. J. Econom.
107(3):797–817.
Bapna R, Umyarov A (2015) Do your online friends make you pay?
A randomized field experiment in an online music social net-
work. Management Sci. 61(8):1902–1920.
Bapna R, Qiu L, Rice SC (2017) Repeated interactions vs. social ties:
Quantifying the economic value of trust, forgiveness, and rep-
utation using a field experiment. MIS Quart. 41(3):841–866.
Berger J, Milkman K (2012) What makes online content viral?
J. Marketing Res. 49(2):192–205.
Bernheim BD (1994) A theory of conformity. J. Political Econom. 102(5):
841–877.
Biyalogorsky E, Gerstner E, Libai B (2001) Customer referral man-
agement: Optimal reward programs. Marketing Sci. 20(1):82–95.
Bond R, Smith PB (1996) Culture and conformity: A meta-analysis of
studies using Asch’s (1952b, 1956) line judgment task. Psych.
Bull. 119(1):111–137.
Burtch G, Hong Y, Bapna R, Griskevicius V (2017) Stimulating online
reviews by combining financial incentives and social norms.
Management Sci. 64(5):2065–2082.
Cai H, Chen Y, Fang H (2009) Observational learning: Evidence from
a randomized natural field experiment. Amer. Econom. Rev. 99(3):
864–882.
Cai J, De Janvry A, Sadoulet E (2015) Social networks and the decision
to insure. Amer. Econom. J. Appl. Econom. 7(2):81–108.
Cameron AC, Trivedi PK (2005) Microeconometrics: Methods and Ap-
plications (Cambridge University Press, Cambridge, UK).
19
Chen H, De P, Hu YJ (2015) IT-enabled broadcasting in social media:
An empirical study of artists’ activities and music sales. Inform.
Systems Res. 26(3):513–531.
Chen Y, Wang Q, Xie J (2011) Online social interactions: A natural
experiment on word of mouth vs. observational learning.
J. Marketing Res. 48(2):238–254.
Crawford VP, Sobel J (1982) Strategic information transmission.
Econometrica 50(6):1431–1451.
Dou Y, Niculescu MF, Wu DJ (2013) Engineering optimal network
effects via social media features and seeding in markets for
digital goods and services. Inform. Systems Res. 24(1):164–185.
Duan W, Gu B, Whinston AB (2008) Do online reviews matter? An
empirical investigation of panel data. Decision Support Systems
45(4):1007–1016.
Duflo E, Glennerster R, Kremer M (2007) Using randomization in
development economics research: A toolkit. Schultz T, Strauss J,
eds. Handbook of Development Economics, vol. 4 (North Holland,
Amsterdam), 3895–3962.
Duflo E, Dupas P, Kremer M (2011) Peer effects, teacher incentives,
and the impact of tracking: Evidence from a randomized eval-
uation in Kenya. Amer. Econom. Rev. 101(5):1739–1774.
Fiske AP (1992) The four elementary forms of sociality: Framework
for a unified theory of social relations. Psych. Rev. 99(4):689–723.
Ghose A, Han SP (2011) An empirical analysis of user content
generation and usage behavior on the mobile Internet. Man-
agement Sci. 57(9):1671–1691.
Gilchrist DS, Sands EG (2016) Something to talk about: Social spill-
overs in movie consumption. J. Polit. Econom. 124(5):1339–1382.
Godes D (2011) Commentary—Invited comment on “Opinion lead-
ership and social contagion in new product diffusion”. Marketing
Sci. 30(2):224–229.
Godes D, Mayzlin D (2004) Using online conversations to study
word-of-mouth communication. Marketing Sci. 23(4):545–560.
Godes D, Mayzlin D, Chen Y, Das S, Dellarocas C, Pfeiffer B, Libai B,
Sen S, Shi M, Verlegh P (2005) The firm’s management of social
interactions. Marketing Lett. 16(3–4):415–428.
Gu B, Park J, Konana P (2012) The impact of external word-of-mouth
sources on retailer sales of high-involvement products. Inform.
Systems Res. 23(1):182–196.
Granovetter M (1973) The strength of weak ties. Amer. J. Sociol. 78(6):
1360–1380.
Hartmann WR (2010) Demand estimation with social interactions and
the implications for targeted marketing. Marketing Sci. 29(4):
585–601.
Hong W, Thong JY, Tam KY (2004) The effects of information format
and shopping task on consumers’ online shopping behavior:
A cognitive fit perspective. J. Management Inform. Systems 21(3):
149–184.
Hong Y, Pavlou PA, Wang K, Shi N (2016) On the role of fairness
and social distance in designing effective social referral systems.
MIS Quart. 41(3):787–809.
Huang N, Sun T, Chen P, Golden JM (2019) Word-of-mouth system
implementation and customer conversion: A randomized field
experiment. Inform. Systems Res. 30(3):805–818.
Huang N, Burtch G, Gu B, Hong Y, Liang C, Wang K, Fu D, Yang B
(2018) Motivating user-generated content with performance
feedback: Evidence from randomized field experiments. Man-
agement Sci. 65(1):327–345.
Horrace WC, Oaxaca RL (2006) Results on the bias and inconsistency
of ordinary least squares for the linear probability model.
Econom. Lett. 90(3):321–327.
Irwin JR, McClelland GH (2003) Negative consequences of dichot-
omizing continuous predictor variables. J. Marketing Res. 40(3):
366–371.
 Sun, Viswanathan, and Zheleva: Social Contagion and Firm-Mediated Message Design
20
Iyengar R, Van den Bulte C, Lee JY (2015) Social contagion in new
product trial and repeat. Marketing Sci. 34(3):408–429.
Jiang Z, Benbasat I (2007) The effects of presentation formats and task
complexity on online consumers’ brand understanding. MIS
Quart. 31(3):475–500.
Jung J, Bapna R, Golden J, Sun T (2020) Words matter! Toward pro-
social call-to-action for online referral: Evidence from two field
experiments. Inform. Systems Res. Forthcoming.
Katona Z, Zubcsek PP, Sarvary M (2011) Network effects and per-
sonal influences: Diffusion of an online social network.
J. Marketing Res. 48(3):425–443.
Kornish LJ, Li Q (2010) Optimal referral bonuses with asymmetric
information: Firm-offered and interpersonal incentives. Mar-
keting Sci. 29(1):108–121.
Kumar N, Benbasat I (2004) The effect of relationship encoding, task
type, and complexity on information representation: An em-
pirical evaluation of 2D and 3D line graphs. MIS Quart. 28(2):
255–281.
Lee YJ, Hosanagar K, Tan Y (2015) Do I follow my friends or the
crowd? Information cascades in online movie ratings. Manage-
ment Sci. 61(9):2241–2258.
Lin M, Lucas HC Jr, Shmueli G (2013) Research commentary—Too
big to fail: Large samples and the p-value problem. Inform.
Systems Res. 24(4):906–917.
Ma L, Krishnan R, Montgomery AL (2015) Latent homophily or social
influence? An empirical analysis of purchase within a social
network. Management Sci. 61(2):454–473.
Manski CF (1993) Identification of endogenous social effects: The
reflection problem. Rev. Econom. Stud. 60(3):531–542.
Muchnik L, Aral S, Taylor SJ (2013) Social influence bias: A ran-
domized experiment. Science 341(6146):647–651.
Reeder GD, Kumar S, Hesson-McInnis MS, Trafimow D (2002) In-
ferences about the morality of an aggressor: The role of perceived
motive. J. Personality Soc. Psych. 83:789–803.
Ryu G, Feick L (2007) A penny for your thoughts: Reward programs
and referral likelihood. J. Marketing 71(1):84–94.
Schmitt P, Skiera B, Van den Bulte C (2011) Referral programs and
customer value. J. Marketing 75(January):46–59.
Schulze C, Schöler L, Skiera B (2014) Not all fun and games: Viral
marketing for utilitarian products. J. Marketing 78(1):1–19.
Qiu L, Tang Q, Whinston AB (2015) Two formulas for success in social
media: Learning and network effects. J. Management Inform.
Systems 32(4):78–108.
Sun M, Zhang X, Zhu F (2019a) U-shaped conformity in online social
networks. Marketing Sci. 38(3):461–480.
Management Science, Articles in Advance, pp. 1–20, © 2020 INFORMS
Sun T, Taylor SJ (2020) Displaying things in common to encourage
friendship formation: A large randomized field experiment.
Quant. Marketing Econom. Forthcoming.
Sun T, Gao G, Jin GZ (2019b) Mobile messaging for offline group
formation in prosocial activities: A large field experiment.
Management Sci. 65(6):2717–2736.
Sundararajan A (2007) Local network effects and complex network
structure. B. E. J. Theoret. Econom. 7(1), https://doi.org/10.2202/
1935-1704.1319.
Susarla A, Oh JH, Tan Y (2012) Social networks and the diffusion of
user-generated content: Evidence from YouTube. Inform. Syst.
Res. 23(1):23–41.
Taylor SJ, Eckles D (2018) Randomized experiments to detect and
estimate social influence in networks. Lehmann S, Ahn Y-Y, eds.
Complex Spreading Phenomena in Social Systems (Springer, Cham,
Switzerland), 289–322.
Tuk MA, Verlegh PW, Smidts A, Wigboldus DH (2009) Sales and
sincerity: The role of relational framing in word-of-mouth
marketing. J. Consumer Psych. 19(1):38–47.
Tucker C (2008) Identifying formal and informal influence in tech-
nology adoption with network externalities. Management Sci.
54(12):2024–2038.
Verlegh PW, Ryu G, Tuk MA, Feick L (2013) Receiver responses to
rewarded referrals: the motive inferences framework. J. Acad.
Marketing Sci. 41(6):669–682.
Wirtz J, Orsingher C, Chew P, Tambyah SK (2012) The role of
metaperception on the effectiveness of referral reward programs.
J. Service Res. 16(1):82–98.
Wooldridge JM (2012) Econometric Analysis of Cross Section and Panel
Data (MIT Press, Cambridge, MA).
Walker D, Muchnik L (2014) Design of randomized experiments in
networks. Proc. IEEE 102(12):1940–1951.
Wang A, Zhang M, Hann IH (2018) Socially nudged: A quasi-
experimental study of friends’ social influence in online prod-
uct ratings. Inform. Systems Res. 29(3):641–655.
Yang M, Ren Y, Adomavicius G (2019) Understanding user-generated
content and customer engagement on Facebook business pages.
Inform. Systems Res. 30(3):839–855.
Yin D, Mitra S, Zhang H (2016) When do consumers value positive vs.
negative reviews? An empirical investigation of confirmation
bias in online word of mouth. Inform. Systems Res. 27(1):131–144.
Zhang J (2010) The sound of silence: Observational learning in the
U.S. kidney market. Marketing Sci. 29(2):315–335.