An agent-based model for the diffusion of innovations with multiple characteristics and price-premiums

This model is developed as a theoretical agent-based model to study the general phenomena of network-based targeting strategies on eco-innovation adoption and diffusion through inter-firm networks.

Knowledge Based Economy (KBE) is an artificial economy where firms placed in geographical space develop original knowledge, imitate one another and eventually recombine pieces of knowledge. In KBE, consumer value arises from the capability of certain pieces of knowledge to bridge between existing items (e.g., Steve Jobs illustrated the first smartphone explaining that you could make a call with it, but also listen to music and navigate the Internet). Since KBE includes a mechanism for the generation of value, it works without utility functions and does not need to model market exchanges.

The aim of the model is to define when researcher’s assumptions of dependence or independence of cases in multiple case study research affect the results — hence, the understanding of these cases.

In this agent-based model, agents decide to adopt a new product according to a utility function that depends on two kinds of social influences. First, there is a local influence exerted on an agent by her closest neighbors that have already adopted, and also by herself if she feels the product suits her personal needs. Second, there is a global influence which leads agents to adopt when they become aware of emerging trends happening in the system. For this, we endow agents with a reflexive capacity that allows them to recognize a trend, even if they can not perceive a significant change in their neighborhood.

Results reveal the appearance of slowdown periods along the adoption rate curve, in contrast with the classic stylized bell-shaped behavior. Results also show that network structure plays an important role in the effect of reflexivity: while some structures (e.g., scale-free networks) may amplify it, others (e.g., small-world structure) weaken such an effect.

In an associated paper which focuses on analyzing the structure of several egocentric networks of collective awareness platforms for sustainable innovation (CAPS), this model is developed. It answers the question whether the network structure is determinative for the sustainability of the created awareness. Based on a thorough literature review a model is developed to explain and operationalize the concept of sustainability of a social network in terms of importance, effectiveness and robustness. By developing this agent-based model, the expected outcomes after the dissolution of the CAPS are predicted and compared with the results of a network with the same participants but with different ties. Twitter data from different CAPS is collected and used to feed the simulation. The results show that the structure of the network is of key importance for its sustainability. With this knowledge and the ability to simulate the results after network changes have taken place, CAPS can assess the sustainability of their legacy and actively steer towards a longer lasting potential for social innovation. The retrieved knowledge urges organizations like the European Commission to adopt a more blended approach focusing not only on solving societal issues but on building a community to sustain the initiated development.

3 simple models to illustrate diffusion of innovations.
The models are discussed in Introduction to Agent-Based Modeling by Marco Janssen. For more information see https://intro2abm.com/

This model aims to simulate Competition and Displacement of Online Interpersonal Communication Platforms process from a bottom-up angle. Individual interpersonal communication platform adoption and abandonment serve as the micro-foundation of the simulation model. The evolution mode of platform user online communication network determines how present platform users adjust their communication relationships as well as how new users join that network. This evolution mode together with innovations proposed by individual interpersonal communication platforms would also have impacts on the platform competition and displacement process and result by influencing individual platform adoption and abandonment behaviors. Three scenes were designed to simulate some common competition situations occurred in the past and current time, that two homogeneous interpersonal communication platforms competed with each other when this kind of platforms first came into the public eye, that a late entrant platform with a major innovation competed with the leading incumbent platform during the following days, as well as that both the leading incumbent and the late entrant continued to propose many small innovations to compete in recent days, respectively.
Initial parameters are as follows: n(Nmax in the paper), denotes the final node number of the online communication network node. mi (m in the paper), denotes the initial degree of those initial network nodes and new added nodes. pc(Pc in the paper), denotes the proportion of links to be removed and added in each epoch. pst(Pv in the paper), denotes the proportion of nodes with a viscosity to some platforms. comeintime(Ti in the paper), denotes the epoch when Platform 2 joins the market. pit(Pi in the paper), denotes the proportion of nodes adopting Platform 2 immediately at epoch comeintime(Ti). ct(Ct in the paper), denotes the Innovation Effective Period length. In Scene 2, There is only one major platform proposed by Platform 2, and ct describes that length. However, in Scene 3, Platform 2 and 1 will propose innovations alternately. And so, we set ct=10000 in simulation program, and every jtt epochs, we alter the innovation proposer from one platform to the other. Hence in this scene, jtt actually denotes the Innovation Effective Period length instead of ct.

I added a discounting rate to the equation for expected values of defective / collaborative strategies.
The discounting rate was set to 0.956, the annual average from 1980 to 2015, using the Consumer Price Index (CPI) of Statistics Korea.

Studies on word-of-mouth identify two behaviors leading to transmission of information between individuals: proactive transmission of information, and information seeking. Individuals who are aware might be curious of it and start seeking for information; they might find around them the expertise held by another individual. Field studies indicate individuals do not adopt an innovation if they don’t hold the corresponding expertise. This model describes this information seeking behavior, and enables the exploration of the dynamics which emerges out of it.