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introduced products to encourage their selection and production, even though
they may not have much history of consumption in that region.
New product designs are initially given a ranking according to their perfor-
mance/cost ratio rank in three dimensions of performance. We assume that product
designs are introduced in a sequence of improving performance/cost ratios, starting
from the lowest and culminating in the highest, yielding a trajectory of product
designs in the space of performance and cost. Since there are three performance
dimensions, there are multiple possible trajectories for any given set of possible
designs, and the trajectories may or may not be disjoint.
Because of feasibility and cost constraints, Producers will initially produce the
designs with lowest costs (both design and manufacturing) and therefore relatively
low (unattractive) performance/cost ratios. Subsequent new product introduction
choices are made from the designs that are next in sequence of performance/cost on
any of the performance dimensions. This defines the 'adjacent possible' for
the Producer. When more than one product design is in the 'adjacent possible',
Producers face a strategic decision to either stay on their current design trajectory
or to move on to a new trajectory. Where design trajectories diverge ('branching
points'), Producer choices for which new product to introduce determine which
design trajectory is realized and which are not. This creates path dependence in
Producer values and, indirectly, in Consumer values too.
11.5 Method
11.5.1 Experimental Design
Our goal is to study how Producer's choices from alternative designs are affected by
evolving Consumer demand and preference (in the post-design phase) as revealed
by their consumption behavior. Producer's choices should reveal how their post-
design learning influences their actions in succeeding pre-design phases.
During the course of a run, Producers can only directly affect their costs by
learning-through-experience. To increase product performance (i.e. to offer higher
utility to Consumers) Producers must discover and offer new designs as they become
feasible and cost-effective. On the other hand, Consumers can only influence their
utility through consumption decisions, which may be satisfying or not, and by
modifying their value systems so that the Products that are available are better
appreciated (possibly).
The phenomena of interest are design trajectories in the space of Product types,
as measured by performance/cost ratios over time. Divergences between alternative
design trajectories represent discontinuous change and (potentially) disruptive
innovations. The simulation system has been designed to allow, from identical initial
conditions, different design trajectories can be realized depending on the co-evolution
of Producer and Consumer values.
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