Evolution of Consumers’ Preferences due to Innovation
AbstractThe integration process between evolutionary approach and conventional economic analysis is very essential for the next development of economic studies, especially in the fundamental concepts of modern economics: supply and demand analysis. In this presentation, we use the concept of meme to explore evolution of demand. This study offers an evolutionary model of demand, which views utility as a function of the distance between the two types of sequences of memes (memeplex), which represent economic product and consumer preference. It is very different from the conventional approach of demand, which only views utility as a function of quantity. This modification provides an opportunity to see innovation and transformation of consumer preferences in the demand perspective. Innovation is seen as a change in sequence of memes in economic products, while the transformation of consumer behavior is defined as a change in the aligning memes of consumer preference. Demand quantity is the result of the selection process. This model produces some interesting characteristics, such as: (i) quantitative and qualitative properties of evolution of demand, (ii) relationship between consumer behavior and properties of evolution of demand that occurred and (iii) power law on the distribution of product lifetime. At the end we show the improvement of utility function, in the concept of meme, might create a new landscape for the further development of economics.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 24159.
Date of creation: 29 Jul 2010
Date of revision:
Evolutionary economics; memetics; demand; evolution; innovation; transformation of consumer behavior;
Find related papers by JEL classification:
- D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
- D91 - Microeconomics - - Intertemporal Choice - - - Intertemporal Household Choice; Life Cycle Models and Saving
- D40 - Microeconomics - - Market Structure and Pricing - - - General
- O33 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
- L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
- E11 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Marxian; Sraffian; Institutional; Evolutionary
- L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
- O31 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
- E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-08-06 (All new papers)
- NEP-EVO-2010-08-06 (Evolutionary Economics)
- NEP-INO-2010-08-06 (Innovation)
- NEP-MKT-2010-08-06 (Marketing)
- NEP-UPT-2010-08-06 (Utility Models & Prospect Theory)
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