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How does consumer choose? The mainstream answer is at odds with everyone's experience. A better formalization is offered by agent-based models with large degrees of imperfect information and bounded rationality.

 

Consumer decision-making in retail investment services

The results of a large-scale survey of EU purchasers and non-purchasers of investment services demonstrate that real people are at odds with neoclassical "homo oeconomicus" assumptions and that their decisions are affected by bounded rationality. Policies bases on this piece of evidence are explored.

PDF

Consumer theory: the neoclassical model and its opposite evolutionary alternative
 
The standard neoclassical model is explained and contrasted to the alternative evolutionary approach to consumer theory.

A free software allows you for direct experimentation.

Essay

Software - neoclassical model

Software - evolutionary model

 

The rich and the poor

An exploration of differences, by leveraging a new key concept (cumulative bundle) and a software.

Essay

Prices and quantities

This paper explore mismatches between ECON101 textbook theory of economics and empirical evidence from the real world that you can collect by yourself, so to replicate (confirming, widening or rejecting) the proposed analyses, as a scientific approach would authorise and ask for.

Essay

 

Consumer decision rules for agent-based models

A clear-cut introduction to evolutionary consumption microfoundation in agent-based models. It proposes several rules to cope with budget constraints, product differentiation, purchase repetition over time.

In particular, you shall find the rules of consumer behavour used in the freely downloadable model "Race to market", which gave rise to these micro-data.

Moreover, it suggests to ACE modellers a "golden rule" for more realistic models.

Essay

Essay: Analysing retailing opportunities and threats using agent-based simulation

As a valuable supporting tool for the marketing analysis of opportunities and threats on retail markets, an agent-based simulator - including rules proposed here - is explained, providing insights to answer to questions such as:

- What happens in the distribution landscape if we open a new outlet? Where should it be located? What profile (assortment composition, price levels, size) the new outlet should have?
- What if competitors open or close outlets? What should we then change in the profile of our outlets?
- What if the purchasing behaviour of consumer households changes? E.g. purchasing power and decision rules changes due to economic crisis.
- What if the cost structure changes? E.g. there is easy funding of outlets in less-favoured areas by municipalities and regional authorities.

PDF

 

Key concepts

Advertising

 

Substitute goods

 

Product differentiation

 

Consumption

 

Cumulative bundle

 

Savings

 

Repurchase

 

Degree of difficulty

 

Elasticity

 

Imitation

 

Inflation

 

Price level

 

Imports

 

Insurance underwriting

 

Key data

Real world elasticity in 144 countries - Price elasticities and income elasticities of consumption classes (food and non-food) - Food share on household budget

MS Excel

 

Consumption expenditure by income classes

A typical monthly expenditure structure for different consumption needs, differentiated by income classes of the households. The confirmation of Engel's law of decreasing importance of food (the higher the income) is accompanied by a host of other interesting features.

MS Excel

 

Gender-specific reaction to promotion and advertising

An empirical assessment of Meyers-Levy's selectivity hypothesis, which suggests that females are comprehensive information processors, while males utilize heuristics to process information schematically

Essay

Advertising expenditure by product

MS Excel

The effectiveness of advertising - an analysis

PDF

 

Consumers' microdata: incomes, preferences, purchase timing


Economic data: Readership of daily newspaper by occupation

MS Excel

Daily time spent on different activities by employment status, sex, and age

MS Excel [19 KB]

 

Income, consumer expenditure, and price level in a regional comparison

MS Excel

Consumers' macroeconomic expectations by age, gender, education and household expenditure

PDF

Households socio-economic survey in Uganda

PDF

Junk food in Asian countries: a comparative study of the influence of advertising


An outlook of African consumers (2012)

 

Papers

Essay: Package size, price, and consumer rules

Optimal commercial offer by retailers depends not only on efficient logistics and buyer's power with respect to the supply chain: it hinges on the segmentation of customers according to their rules of choice.

In this paper, an example of purchase basket over many categories, varieties and package sizes is constructed and commented, freely offering the Excel file with all open programming code.

Consumers can find out their style of shopping; managers have a device to fix the prices in your commercial premise, the researchers and the absolute beginners can simply explore the unexpected consequences of the interaction of such trivial, but real, things like package size, weight, and budget constraints.

Essay

Software

Essay: Levels of product differentiation in the global mobile phones market
 
6 different levels of product differentiation are proposed and interpreted in a new enhanced way by Prof. Andonov.

Essay

 

Consumer behaviour of luxury automobiles: A comparative study between Thai and UK customers’ perceptions


Dynamic competition with bi-directional product differentiation, bounded rational consumers, innovation, advertising, and finance

This paper explains and offers you a powerful software tool for understanding the introduction of product and process innovation in a competitive market. Consumers are individual agents with different tastes and personal income. In terms of industrial dynamics, you'll see how product life cycles arise by personally playing the software model or by observing how artificial agents perform.

A consumer memory-based model of new product diffusion within a social network by J. Kottonau, J. Burse, C. Pahl-Wostl

Agent-based Explorations into Consumer Choice Modeling by C. Stumpo

Agent-based modelling of customer behaviour in the telecoms and media markets by P. Twomey and R Cadman

A Model of Bounded Rational Consumers with Endogenous Preferences by M. Valente

An Agent-based model for the study of publicity/consumer dynamics" by J.J. Merelo, A. Prieto

An integrated approach to simulating behavioural processes: A case study of the lock-in of consumption patterns by M. Janssen, W. Jager (1999) in Journal of Artificial Societies and Social Simulation

Artificial Life simulations: Consumer behavior modeling for marketing strategy by B. G. Tedesco

Consumer Behaviour and Technological Complexity in the Evolution of Markets by M. Valente

Consumer Decision Making and Beyond by L. Schiffman, L. Kanuk

Demand Dynamics With Socially Evolving Preferences by R. Aversi, G. Dosi, G. Fagiolo, M. Meacci, C. Olivetti

Demand dynamics with bounded rational buyers and endogenous preferences by M. Valente

Developing Heuristic-Based Quality Judgements: Attention Blocking in Consumer Choice (experimental evidence) by R. J. Oxoby and H. Finnigan

Diffusion Dynamics in Small-World Networks with Heterogeneous Consumers by S. A. Delre, W. Jager, M. A. Janssen

Do Consumers Really Know if the Price Is Right? Direct Measures of Reference Price and Their Implications For Retailing by Marc Vanhuele Xavier Drze

Fashion, Growth and Welfare: An Evolutionary Approach by A. Chai, P. Earl, J. Potts

From Status-Seeking Consumption to Social Norms: An Application to the Consumption of Cleanliness by Julia Sophie Woersdorfer

Engel Curves Specification in an Artificial Model of Consumption Dynamics with Socially Evolving Preferences by G. Fagiolo

Integrated Multi-agent-based Supply Chain Management by D. Frey, T. Stockheim, P. Woelk, R. Zimmermann

Markets for heterogeneous products: a bounded rational consumer model by M. Valente

Modelling consumer behaviour by W. Jager

Modelling Demand for Innovative Products by M. Valente

Multi-Agent Based Simulation of Consumer Behaviour: Towards a New Marketing Approach" by L. Ben Saida, A. Drogoulb and T. Bouron

Networks of agents with advertising by F. Alkemade

Simulating Market Dynamics: Interactions between Consumer Psychology and Social Networks by M. A. Janssen and W. Jager

Simulation Methodology: an Example in Modelling Demand by M. Valente

Targeting and timing promotional activities: An agent-based model for the takeoff of new products by S.A. Delre, W. Jager , T.H.A. Bijmolt, M.A. Janssen

Towards an alternative paradigm of consumer behaviour by Viviana Di Giovinazzo

Waves in Consumption with Interdependence among Consumers by R. Cowan, W. Cowan, G.M. P. Swann.

Consumption indigence and risks: an empirical study in Vietnam

The behaviour of mobile users in Finland

Further evolutionary models of consumer behaviour

 

 

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