2018
DOI: 10.1016/j.strueco.2018.06.001
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Fashion, fads and the popularity of choices: Micro-foundations for diffusion consumer theory

Abstract: Knowledge acquisition by consumers is a key process in the diffusion of innovations. However, in standard theories of the representative agent, agents do not learn and innovations are adopted instantaneously. Here, we show that in a discrete choice model where utility-maximising agents with heterogenous preferences learn about products through peers, their stock of knowledge on products becomes heterogenous, fads and fashions arise, and transitivity in aggregate preferences is lost. Non-equilibrium path-depend… Show more

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Cited by 17 publications
(26 citation statements)
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“…In reality, social influence effects [136] and the actions of "transformational individuals" [137] who inspire others to collective action appear to be important in driving changes to values and behaviour. An additional layer of complexity is also introduced when such trends are considered to evolve dynamically over time [138].…”
Section: Representation Of Societymentioning
confidence: 99%
“…In reality, social influence effects [136] and the actions of "transformational individuals" [137] who inspire others to collective action appear to be important in driving changes to values and behaviour. An additional layer of complexity is also introduced when such trends are considered to evolve dynamically over time [138].…”
Section: Representation Of Societymentioning
confidence: 99%
“…For the diffusion of innovations, industrial and social dynamics are self-reinforcing, and both make it more likely that households choose dominant technologies. We represent these dynamics by constraining a technology's growth by its market share (S i ), based on Mercure (2017Mercure ( , 2015.…”
Section: Technology Diffusion Dynamicsmentioning
confidence: 99%
“…This is a dynamical equation that is path-dependent and hysteretic (Mercure, 2018). 10 Costs and policy incentivise agents to make choices that orient the trajectory of diffusion, and the trajectory has momentum.…”
Section: The Replicator Dynamics Equation Of Evolutionary Theorymentioning
confidence: 99%
“…In the equilibrium model, agents all respond in the same way to changes in government policy. Without social influence, the market shares for the technology will change only if the incentives change (Mercure, 2018).…”
Section: Social Influence and Consumer Choicesmentioning
confidence: 99%
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