"Do friends influence purchases in a social network?"

A working paper from the Harvard Business School examines the question, "Do friends influence purchases in a social network?" The short answer from researchers Raghuram Iyengar, Sangman Han, and Sunil Gupta is: it depends.

So, while in general a friend's purchases has a positive impact on the purchase probability of a user, there are great differences across different types of users. For example, "Highly connected users tend to reduce their purchases of items when they see their friends buying them." (In other words, if others are buying it, it's no longer cool...)

You can read the abstract and executive summary here, and then link to the full-text PDF of the working paper.