Minority Health Archive

Simulating Market Dynamics:Interactions between Consumer Psychology and Social Networks

Janssen, Marco and Jager, Wander (2003) Simulating Market Dynamics:Interactions between Consumer Psychology and Social Networks. Artificial LIfe, 9. pp. 343-356.

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Abstract

Markets can show different types of dynamics,from quiet markets dominated by one or a few products, to markets with continual penetration of new and reintroduced products. In a previous article we explored the dynamics of markets from a psychological perspective using a multi-agent simulation model. The main results indicated that the behavioral rules dominating the artificial consumer’s decision making determine the resulting market dynamics,such as fashions, lock-in, and unstable renewal. Results also show the importance of psychological variables like social networks, preferences, and the need for identity to explain the dynamics of markets. In this article we extend this work in two directions. First, we will focus on a more systematic investigation of the effects of different network structures. The previous article was based on Watts and Strogatz’s approach, which describes the small-world and clustering characteristics in networks. More recent research demonstrated that many large networks display a scale-free power-law distribution for node connectivity. In terms of market dynamics this may imply that a small proportion of consumers may have an exceptional influence on the consumptive behavior of others (hubs, or early adapters). We show that market dynamics is a self-organized property depending on the interaction between the agents’ decision-making process (heuristics), the product characteristics (degree of satisfaction of unit of consumption, visibility), and the structure of interactions between agents (size of network and hubs in a social network).


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Item Type: Article
Additional Information: This article is available at the publisher’s Web site. Access to the full text is subject to the publisher’s access restrictions.
Uncontrolled Keywords: Decision making, heuristics, networks, market dynamics
Subjects: Research
Teaching > Instructional Tools & Models
Related URLs:
    Depositing User: Jamie Bialor
    Date Deposited: 05 Jan 2010
    Last Modified: 12 Jan 2012 10:28
    Link to this item (URI): http://health-equity.lib.umd.edu/id/eprint/1297

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