Diffusion in Platform-based Markets: Big Data Driven Agent-based Model

Adoption of competing platforms, such as video game consoles, is usually explained retrospectively with cumulative, direct (overall quantity of other players) and indirect network effects (overall quantity of games). An agent-based model, fed with big data representing the competition between PlayStation 3 and Xbox 360, shows that the quality of the network effects explain adoption more accurately than the mere strength of these effects. Instead of choosing a console with the strongest network effects (highest amount of other players and games), players choose the console with the highest quality of direct network effects (amount of friends among the players) and indirect network effects (amount of games that are aligned with the preferences of the player).