Saddle points in innovation diffusion curves: An explanation from bounded rationality

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. © Springer-Verlag Berlin Heidelberg 2014.