Fashions, habits and changing preferences: Simulation of psychological factors affecting market dynamics

Marco A. Janssen, Wander Jager

Research output: Contribution to journalArticle

89 Scopus citations

Abstract

Markets can show different types of dynamics, from quiet markets dominated by one or few products, to markets with constant penetration of new and reintroduced products. This paper explores the dynamics of markets from a psychological perspective using a multi-agent simulation model. The behavioural rules of the artificial consumers, the consumats, are based on a conceptual meta-theory from psychology. The artificial consumers have to choose each period between similar products. Products remain in the market as long as they maintain a minimum level of market share, else they will be replaced by a new product. Assuming a population of consumats with different preferences, and social networks, the model simulates adoption of new products for alternative assumptions on behavioural rules. Furthermore, the consequences of changing preferences and the size of social networks are explored. Results show that the behavioural rules that dominate 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.

Original languageEnglish (US)
Pages (from-to)745-772
Number of pages28
JournalJournal of Economic Psychology
Volume22
Issue number6
DOIs
StatePublished - Dec 1 2001
Externally publishedYes

Keywords

  • Changing preferences
  • Consumer behaviour
  • Lock-in
  • Social networks

ASJC Scopus subject areas

  • Applied Psychology
  • Sociology and Political Science
  • Economics and Econometrics

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