Real Word-of-Mouth Interaction and Organization of Behavior∗

We present a model of word-of-mouth interaction. Agents interact on fixed, regular social network and exchange information in order to make a choice between multiple alternatives. Communicated information includes rumors. The model also includes the inertia in economic behavior. We analyze the organization of behavior in the long run. We show that for a large range of initial conditions clustering in economic behavior in case of two-option environment emerges and persists indefinitely. Multi-option setup is also investigated. Here it turns out that long-run option popularity distribution is heavily skewed with few options dominating large portion of social space.