Product Decisions in Presence of Social Learning and Reference Point Effect

doi:10.16182/j.issn1004731x.joss.20-0768

Abstract

Abstract:

Social learning is defined as the process that consumers use online reviews to fetch more precise information about product quality.Consequently, consumers would be more likely to purchase the product if the product quality learned was higher than their expectation, reference point effect named.To understand the impact of this effect in social learning on a firm's product decisions, we built a multi-agent model to solve the problem through simulation. According to the results, the reference point effect has a negative influence on the firm. The firm has to higher the product quality and price and therefore loses some profits. However, if the quantity of sales is taken into consideration, the firm can resort to low product quality and price to boost the quantity of sales significantly at a low profit cost.

Key words: social learning, reference point, product quality, product price decision, multi-agent based modeling and simulation

CLC Number:

TP391.3

Feng Li, Ying Wei. Product Decisions in Presence of Social Learning and Reference Point Effect[J]. Journal of System Simulation, 2022, 34(2): 234-246.

Figures/Tables 11

Table 1

Main Parameters in thesimulationmodel

参数	取值
消费者数量M	10 000
仿真重复次数N	120
消费者到来泊松分布μ	500
消费者产品效用反均匀分布a	0.5
消费者产品效用反均匀分布b	2.0
消费者产品质量感知偏差 $δ i$	0.10
消费者产品质量体验偏差 $δ h$	0.10
参照点效应 $λ$	2.25
参照点效应 $α$	0.88
参照点效应 $β$	0.88

Table 1

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