Game Theory

The use of instant messaging applications on cell phone has been growing rapidly because of the boom of the smartphone market, which was ignited in part by the launch of IPhone in 2007 and in part by the wide-availability of network connections . There is a trend that people start to shift from using traditional SMS to instant messaging applications . In this paper, I will discuss the network effect on instant messaging applications and investigate the relationship between them.

Network effect is the phenomenon that a user's utility of using a good or service depends on the number of users using the same product in that network. There are many studies showing that the network effect exists in many industries. (Economides & Himmelberg, 1995) In this paper, I will mainly focus on discussing direct network effect, which means that an increase in usage leads to a direct increase in value for other users, as there are not many side products related to these applications.

I conducted a survey about three popular instant messaging applications, WhatsApp messenger, LINE and Wechat, to investigate their spreading speed due to network effect. All of them are cross-platform instant messaging applications that allow user to send each other images, video and audio media messages in addition to text message.