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Evolution of Consumers’ Preferences due to Innovation

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  • Dahlan, Rolan Mauludy
  • Situngkir, Hokky

Abstract

The 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.

Suggested Citation

  • Dahlan, Rolan Mauludy & Situngkir, Hokky, 2010. "Evolution of Consumers’ Preferences due to Innovation," MPRA Paper 24159, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:24159
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    File URL: https://mpra.ub.uni-muenchen.de/24159/1/MPRA_paper_24159.pdf
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    References listed on IDEAS

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    1. repec:wsi:ijmpcx:v:11:y:2000:i:06:n:s0129183100000936 is not listed on IDEAS
    2. Tiktik Dewi Sartika, 2004. "Tracing Cultural Evolution Through Memetics," Computational Economics 0405007, EconWPA.
    3. Steven Payson, 1995. "Product Evolution: What It Is and How It Can Be Measured," Eastern Economic Journal, Eastern Economic Association, vol. 21(2), pages 247-262, Spring.
    4. Bisin, Alberto & Verdier, Thierry, 2001. "The Economics of Cultural Transmission and the Dynamics of Preferences," Journal of Economic Theory, Elsevier, vol. 97(2), pages 298-319, April.
    5. Katarzyna Sznajd-Weron, 2005. "Sznajd model and its applications," HSC Research Reports HSC/05/04, Hugo Steinhaus Center, Wroclaw University of Technology.
    6. Katarzyna Sznajd-Weron & Józef Sznajd, 2000. "Opinion Evolution In Closed Community," International Journal of Modern Physics C (IJMPC), World Scientific Publishing Co. Pte. Ltd., vol. 11(06), pages 1157-1165.
    7. Garcia-Torres, Abraham, 2009. "Consumer behaviour: evolution of preferences and the search for novelty," MERIT Working Papers 005, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    8. Deni Khanafiah & Hokky Situngkir, 2004. "Innovation as Evolution," Industrial Organization 0412009, EconWPA.
    9. Hokky Situngkir, 2004. "On Selfish Memes: culture as complex adaptive system," Computational Economics 0405001, EconWPA.
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    More about this item

    Keywords

    Evolutionary economics; memetics; demand; evolution; innovation; transformation of consumer behavior;

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; 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; Kaleckian
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; 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)

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