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The importance of peer influence on consumer actions plays a vital role inmarketing efforts. However, peer influence effects are often confounded withlatent homophily, which are unobserved commonalities that drive friendship.Understanding causality has become one of the pressing issues of currentresearch. We present an approach to explicitly account for various causalinfluences. We implement a simulation framework to show the effectiveness oftwo latent homophily proxies, latent coordinates and community membership, inimproving peer influence effect estimates on game downloads in a Japanesesocial network website. We demonstrate that latent homophily proxies have nosignificant improvement in peer influence effect bias in the available websitedata.

Bias reduction of peer influence effects with latent coordinates and community membership