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Why, when, and how fast innovations are adopted

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  • Sebastian Goncalves
  • M. F. Laguna
  • J. R. Iglesias

Abstract

When the full stock of a new product is quickly sold in a few days or weeks, one has the impression that new technologies develop and conquer the market in a very easy way. This may be true for some new technologies, for example the cell phone, but not for others, like the blue-ray. Novelty, usefulness, advertising, price, and fashion are the driving forces behind the adoption of a new product. But, what are the key factors that lead to adopt a new technology? In this paper we propose and investigate a simple model for the adoption of an innovation which depends mainly on three elements: the appeal of the novelty, the inertia or resistance to adopt it, and the interaction with other agents. Social interactions are taken into account in two ways: by imitation and by differentiation, i.e., some agents will be inclined to adopt an innovation if many people do the same, but other will act in the opposite direction, trying to differentiate from the "herd". We determine the conditions for a successful implantation of the new technology, by considering the strength of advertising and the effect of social interactions. We find a balance between the advertising and the number of anti-herding agents that may block the adoption of a new product. We also compare the effect of social interactions, when agents take into account the behavior of the whole society or just a part of it. In a nutshell, the present model reproduces qualitatively the available data on adoption of innovation.

Suggested Citation

  • Sebastian Goncalves & M. F. Laguna & J. R. Iglesias, 2012. "Why, when, and how fast innovations are adopted," Papers 1208.2589, arXiv.org.
    • Handle: RePEc:arx:papers:1208.2589
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    References listed on IDEAS

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    1. Gordon, Mirta B. & Nadal, Jean-Pierre & Phan, Denis & Vannimenus, Jean, 2005. "Seller's dilemma due to social interactions between customers," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 356(2), pages 628-640.
    2. Tatiana Bouzdine-Chameeva & Serge Galam, 2011. "Word-Of-Mouth Versus Experts And Reputation In The Individual Dynamics Of Wine Purchasing," Advances in Complex Systems (ACS), World Scientific Publishing Co. Pte. Ltd., vol. 14(06), pages 871-885.
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    4. Mas-Colell, Andreu & Whinston, Michael D. & Green, Jerry R., 1995. "Microeconomic Theory," OUP Catalogue, Oxford University Press, number 9780195102680.
    5. Laguna, M.F. & Risau Gusman, S. & Abramson, G. & Gonçalves, S. & Iglesias, J.R., 2005. "The dynamics of opinion in hierarchical organizations," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 351(2), pages 580-592.
    6. Galam, Serge & Vignes, Annick, 2005. "Fashion, novelty and optimality: an application from Physics," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 351(2), pages 605-619.
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    Cited by:

    1. María Cecilia Gimenez & Luis Reinaudi & Ana Pamela Paz-García & Paulo Marcelo Centres & Antonio José Ramirez-Pastor, 2021. "Opinion evolution in the presence of constant propaganda: homogeneous and localized cases," The European Physical Journal B: Condensed Matter and Complex Systems, Springer;EDP Sciences, vol. 94(1), pages 1-11, January.
    2. F. Jacobs & S. Galam, 2019. "Two-Opinions-Dynamics Generated By Inflexibles And Non-Contrarian And Contrarian Floaters," Advances in Complex Systems (ACS), World Scientific Publishing Co. Pte. Ltd., vol. 22(04), pages 1-30, June.
    3. Gordon, Mirta B. & Laguna, M.F. & Gonçalves, S. & Iglesias, J.R., 2017. "Adoption of innovations with contrarian agents and repentance," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 486(C), pages 192-205.
    4. Laguna, M.F. & Iglesias, J.R. & Gonçalves, Sebastián, 2019. "Irrational behavior in the adoption of innovations," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 535(C).
    5. Kindler, A. & Solomon, S. & Stauffer, D., 2013. "Peer-to-peer and mass communication effect on opinion shifts," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 392(4), pages 785-796.

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