Diffusion of Innovation Within an Agent-Based Model: Spinsons, Independence and Advertising

Abstract

In this paper, we modify a two-dimensional variant of a two-state nonlinear voter model and apply it to understand how new ideas, products or behaviors spread throughout the society in time. In particular, we want to find answers to two important questions in the field of diffusion of innovation: Why does the diffusion of innovation take sometimes so long? and Why does it fail so often? Because these kind of questions cannot be answered within classical aggregate diffusion models, like the Bass model, we use an agent-based modeling approach.

Linking Consumer Opinions with Reservation Prices in an Agent-Based Model of Innovation Diffusion

“…The model we present here is an extended version of the model of innovation diffusion proposed by Przybyła et al [4] and applied to modeling of the adoption of dynamic electricity tariffs by Kowalska-Pyzalska et al [5]. There are two major modifications.…”

“…Unfortunately, this modification introduces a new parameter -market price P -to the model. Because the dependence on the remaining parameters has been extensively studied in [4], here we concentrate on the role of P . Secondly, we consider the size of the influence group, q, as a parameter.…”

“…Secondly, we consider the size of the influence group, q, as a parameter. Such a generalization has been studied in the absence of the external field [11], but in case of innovation diffusion only a single value of q = 4 has been considered [4,5]. Here, we briefly discuss also the role of q, because we believe that next to the optimal product price this knowledge could also be useful in building marketing strategies.…”

“…Now, following the argumentation in [4,15], these probabilities can be written in the following form:…”

“…In this paper we extend a relatively simple, yet sufficiently rich agent-based model of opinion formation [4,5] by linking the opinions of potential consumers with their market behavior via the concept of the reservation price, i.e. the highest price that an agent will accept and still purchase the good [6].…”