Adoption of Bundled Services with Network Externalities and Correlated Affinities

The goal of this article is to develop a principled understanding of when it is beneficial to bundle technologies or services whose value is heavily dependent on the size of their user base, that is, exhibits positive exernalities. Of interest is how the joint distribution, and in particular the correlation, of the values users assign to components of a bundle affect its odds of success. The results offer insight and guidelines for deciding when bundling new Internet technologies or services can help improve their overall adoption. In particular, successful outcomes appear to require a minimum level of value correlation. Categories and Subject Descriptors (2012): Networks -- Network Algorithms -- Network economics; Networks -- Network properties -- Network dynamics; Information systems -- Information systems applications -- Collaborative and social computing systems and tools; Security and privacy -- Human and societal aspects of security and privacy; Human-centered computing -- Collaborative and social computing theory, concepts and paradigms