A non-standard approach to a market with boundedly rational consumers and strategic firms. Part I: A microfoundation for the evolution of sales

In our model, individual consumers follow simple behavioral decision rules based on imitation and habit as suggested in consumer research, social learning, and related fields. Demand can be viewed as the outcome of a population game whose revision protocol is determined by the consumers' behavioral rules. The consumer dynamics are then analyzed in order to explore the demand side and first implications for a strategic supply side.bounded rationality, social learning, population game, mean dynamic

Taking a shower in Youth Hostels: risks and delights of heterogeneity

Tuning one's shower in some hotels may turn into a challenging coordination game with imperfect information. The temperature sensitivity increases with the number of agents, making the problem possibly unlearnable. Because there is in practice a finite number of possible tap positions, identical agents are unlikely to reach even approximately their favorite water temperature. Heterogeneity allows some agents to reach much better temperatures, at the cost of higher risk.coordination, heterogeneity, adaptive learning, non-linear system, feedback

Product Pricing when Demand Follows a Rule of Thumb

We analyze the strategic behavior of firms when demand is determined by a rule of thumb behavior of consumers. We assume consumer dynamics where individual consumers follow simple behavioral decision rules governed by imitation and habit as suggested in consumer research. On this basis, we investigate monopoly and competition between firms, described via an open-loop differential game which in this setting is equivalent to but analytically more convenient than a closed-loop system. We derive a Nash equilibrium and examine the influence of advertising. We show for the monopoly case that a reduction of the space of all price paths in time to the space of time-constant prices is sensible since the latter in general contains Nash equilibria. We prove that the equilibrium price of the weakest active firm tends to marginal cost as the number of (non-identical) firms grows. Our model is consistent with observed market behavior such as product life cycles.bounded rationality, social learning, population game, differential game, product life cycle, monopoly, competition, pricing, advertising

Generating functional analysis of a model economy with hetrogeneous adaptive consumers

This thesis examines the dynamics of a market with hetrogeneous and adaptive consumers who make their purchase decisions repeatedly. The main mathematical tool applied is the generating functional formalism. This tool allows for forming an average over the randomly assigned strategies of the consumers while simultaneously retaining all macroscopic information. The focus lies on the analysis of the stationary state of the ergodic region. First, the problem and the appropriate model are described, the generating functional analysis is then applied and finally the analytical results are interpreted and compared to numerical computer simulations

Bounded Rationality, Heterogeneity and Learning

The dissertation deals with both a model in which agents with limited information conform to a learning rule, as well as boundedly rational consumers who follow simple rules of thumb. The first case is treated within a generic, illustrative model situation, the so-called Shower Temperature Problem, in which the agents possess either the same (homogeneous) or an individual (heterogeneous) action space. The latter case is treated for consumer markets and additionally requires the modeling of an appropriate, strategic pricing of firms. The analysis of the Shower Temperature Problem shows that action heterogeneity represents a robust solution for the agents with only few systematic deviations, but at the cost of a higher risk for the individual agent than in the homogeneous case. Regarding the market of boundedly rational consumers, interesting results are obtained how psychological and experimental results can be cast into a mathematical model with boundedly rational, habit-forming and imitative consumers; this consumer model is analyzed and consequences are investigated. From the firms' point of view, conditions under which firms operate profitably in the long-term are examined. Furthermore, it is shown that the considered market is in a sense well-behaved, since for a rising number of firms, the prices decrease, the prices of the weakest products converge against marginal costs, and the welfare rises. Additionally, it is proven for a monopoly that Nash equilibria are found in the strategy space of all time-constant price paths. Finally, advertising is shown to be an effective method to sustain demand

Taking a shower in Youth Hostels: risks and delights of heterogeneity

Tuning one's shower in some hotels may turn into a challenging coordination game with imperfect information. The temperature sensitivity increases with the number of agents, making the problem possibly unlearnable. Because there is in practice a finite number of possible tap positions, identical agents are unlikely to reach even approximately their favorite water temperature. We show that a population of agents with homogeneous strategies is evolutionary unstable, which gives insights into the emergence of heterogeneity, the latter being tempting but risky.Comment: 13 pages, 7 figure

Taking a shower in Youth Hostels: risks and delights of heterogeneity

Tuning one's shower in some hotels may turn into a challenging coordination game with imperfect information. The temperature sensitivity increases with the number of agents, making the problem possibly unlearnable. Because there is in practice a finite number of possible tap positions, identical agents are unlikely to reach even approximately their favorite water temperature. Heterogeneity allows some agents to reach much better temperatures, at the cost of higher risk

A Distinct Endogenous Pararetrovirus Family in Nicotiana tomentosiformis, a Diploid Progenitor of Polyploid Tobacco

A distinct endogenous pararetrovirus (EPRV) family corresponding to a previously unknown virus has been identified in the genome of Nicotiana tomentosiformis, a diploid ancestor of allotetraploid tobacco (Nicotiana tabacum). The putative virus giving rise to N. tomentosiformis EPRVs (NtoEPRVs) is most similar to tobacco vein clearing virus, an episomal form of a normally silent EPRV family in Nicotiana glutinosa; it is also related to a putative virus giving rise to the NsEPRV family in Nicotiana sylvestris (the second diploid progenitor of tobacco) and in the N. sylvestris fraction of the tobacco genome. The copy number of NtoEPRVs is significantly higher in N. tomentosiformis than in tobacco. This suggests that after the polyploidization event, many copies were lost from the polyploid genome or were accumulated specifically in the diploid genome. By contrast, the copy number of NsEPRVs has remained constant in N. sylvestris and tobacco, indicating that changes have occurred preferentially in the NtoEPRV family during evolution of the three Nicotiana species. NtoEPRVs are often flanked by Gypsy retrotransposon-containing plant DNA. Although the mechanisms of NtoEPRV integration, accumulation, and/or elimination are unknown, these processes are possibly linked to retrotransposon activity