Quality risk aversion, conjectures, and new product diffusion

Francesco Bogliacino and Giorgio Rampa ()

Journal of Evolutionary Economics, 2012, vol. 22, issue 5, 1115 pages

Abstract: In this paper, we provide a generalization of the standard models of the diffusion of a new product. Consumers are heterogeneous and risk averse, and the firm is uncertain about the demand curve: both learn from past observations. The attitude towards risk has important effects with regard to the diffusion pattern. In our model, downward-biased signals to consumers can prevent the success of the product, even if its objective quality is high: a “lock-in” result. We show, in addition, that the standard logistic pattern can be derived from the model. Finally, we discuss the steady states of the learning dynamics, with regard to the multiplicity and the local stability of equilibria, and to their welfare properties. Copyright Springer-Verlag 2012

Keywords: Heterogeneity; Multiple equilibria; Lock-in; Product diffusion; Risk aversion; L15; D81; O33 (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://hdl.handle.net/10.1007/s00191-011-0255-z (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Quality Risk Aversion, Conjectures, and New Product Diffusion (2009)
Working Paper: Quality Risk Aversion, Conjectures, and New Product Diffusion (2009)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:joevec:v:22:y:2012:i:5:p:1081-1115

Ordering information: This journal article can be ordered from
http://www.springer.com/economics/journal/191/PS2

DOI: 10.1007/s00191-011-0255-z

Access Statistics for this article

Journal of Evolutionary Economics is currently edited by Uwe Cantner, Elias Dinopoulos, Horst Hanusch and Luigi Orsenigo

More articles in Journal of Evolutionary Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().