The authors quantify the impact of social interactions and peer effects in the context of physicians’ prescription choices. Using detailed individual-level prescription data, along with self-reported social network information, the authors document that physician prescription behavior is significantly influenced by the behavior of research-active specialists, or “opinion leaders,” in the physician's reference group. The authors leverage a natural experiment in the category: New guidelines released about the therapeutic nature of the focal drug generated conditions in which physicians were more likely to be influenced by the behavior of specialist physicians in their network. The authors (1) find important, statistically significant peer effects that are robust across model specifications; (2) document asymmetries in response to marketing activity across nominators and opinion leaders; (3) measure the incremental value to firms of directing targeted sales force activity to these opinion leaders; and (4) present estimates of the social multiplier of detailing in this category.
