Demonstration effect

Abstract

The demonstration effect is generally defined as changes to the behavior patterns of the hosts as a consequence of observing the guests. It is an effect that has been accepted as being intuitively correct but with very little empirical evidence to support it. Within economics, the demonstration effect has been noted for some time. Adam Smith and David Hume observed that, with industrialization, it became more socially acceptable to imitate those of a higher social class. Duesenberry (1952) provided some empirical support for this view and probably coined the phrase “demonstration effect.” However, in economics the imitative behavior was restricted to consumption.