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Saddle Points in Innovation Diffusion Curves:
An Explanation from Bounded Rationality
Lorena Cadavid and Carlos Jaime Franco Cardona
Universidad Nacional de Colombia - sede Medellín, Medellín, Colombia
{dlcadavi,cjfranco}@unal.edu.co
Abstract.
Empirical evidence shows that mostly complete and successful
processes of innovation diffusion are S-shaped. However, some diffusion
processes exhibit a non-perfect S-curve, but show a saddle point, which is
displayed as a double-S. The reasons behind this phenomenon have been little
studied in the literature. This paper addresses the emergence of the double-S
phenomenon in the innovation diffusion process and provides an explanation
for it. In order to do that, the authors develop an agent-based simulation model
to representing the diffusion of two innovations in a competitive market
considering elements of bounded rationality. The results show saddle points
appear as a result of three characteristics: (1) the heterogeneity in the
population, (2) the presence of asymmetric information and (3) the satisfaction
criterion for selection.
Keywords:
Innovation Diffusion, Agent-based Modeling, Bounded Rationality.
1
Introduction
The spread of an innovation over markets is known as innovation diffusion, a process
by which an innovation is communicated through certain channels over time among
members of a social system [1]. Empirical studies show that successful and complete
processes of innovation diffusion take S shape [2], as many natural phenomena;
hence, theoretical studies attempt to find the rate and amount of adopters in a specific
population during a period of time [3].
Nevertheless, some diffusion processes exhibit a non-perfect S-curve, but show a
saddle point, which is displayed as a double-S. Figure 1 shows the diffusion curves
for telephone, automobile, air conditioning and clothes washer in U.S.A, as some of
the examples of this phenomenon. Evidence form Europe is collected by Goldenberg,
Libai, and Muller [4], as well as recent S-shape diffusion data are presented by Tellis
and Chandrasekaran [5].
