Why, when, and how fast innovations are adopted
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.
References listed on IDEAS
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- 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.
- Jean-Pierre Nadal & Denis Phan & Mirta Gordon & Jean Vannimenus, 2005.
"Multiple equilibria in a monopoly market with heterogeneous agents and externalities,"
Taylor & Francis Journals, vol. 5(6), pages 557-568.
- Denis Phan & Mirta Gordon & J.-P. Nadal & J. Vannimenus, 2005. "Multiple equilibria in a monopoly market with heterogeneous agents and externalities," Post-Print halshs-00078792, HAL.
- 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.
- Mirta Gordon & Jean-Pierre Nadal & Denis Phan & Jean Vannimenus, 2005. "Sellers dilemna due to social interactions between customers," Post-Print halshs-00078451, HAL.
- 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.
- Mas-Colell, Andreu & Whinston, Michael D. & Green, Jerry R., 1995. "Microeconomic Theory," OUP Catalogue, Oxford University Press, number 9780195102680. Full references (including those not matched with items on IDEAS)
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