NFTs as a Data-Rich Test Bed: Conspicuous Consumption and its Determinants

Taylor Lundy, Narun Krishnamurthi Raman, Scott Kominers, Kevin Leyton-Brown

Track: Economics, online markets and human computation

Keywords: NFT, blockchain, conspicuous consumption, empirical economics, digital goods

Abstract: We show that the market for non-fungible tokens (NFTs), much like the luxury fashion market, exhibits conspicuous consumption dynamics: an NFT's value depends substantially on its social meaning as a signal of wealth, taste, and community affiliation. More specifically, we introduce a novel dataset of NFT transaction data combined with embeddings of the corresponding NFT images computed using an off-the-shelf vision transformer architecture. We use our dataset to identify evidence for two phenomena that prior work has identified as the primary determinants of conspicuous consumption: the \emph{bandwagon effect} and the \emph{snob effect}. For each determinant, we identify characteristics of the NFTs themselves and of the communities surrounding them that drive the effect.

Submission Number: 2302