A General Framework to Forecast the Adoption of Novel Products: A Case of Autonomous Vehicles

TL;DR

This paper introduces a comprehensive framework combining a new consumer behavior model and agent-based simulation to forecast the adoption of autonomous vehicles, accounting for social influence and risk preferences.

Contribution

It develops a novel hybrid choice model incorporating social network effects and integrates it into an agent-based model for accurate adoption forecasting.

Findings

Autonomous vehicles are projected to reach 85% market share in 30 years under specified conditions.

The model highlights the impact of price reduction, satisfaction, and safety on adoption rates.

The framework aids policymakers and manufacturers in strategic planning and analysis.

Abstract

Due to the unavailability of prototypes, the early adopters of novel products actively seek information from multiple sources (e.g., media and social networks) to minimize the potential risk. The existing behavior models not only fail to capture the information propagation within the individual's social network, but also they do not incorporate the impact of such word-of-mouth (WOM) dissemination on the consumer's risk preferences. Moreover, even cutting-edge forecasting models rely on crude/synthetic consumer behavior models. We propose a general framework to forecast the adoption of novel products by developing a new consumer behavior model and integrating it into a population-level agent-based model. Specifically, we extend the hybrid choice model to estimate consumer behavior, which incorporates social network effects and interplay between WOM and risk aversion. The calibrated consumer behavior model and synthetic population are passed through the agent-based model for forecasting the product market share. We apply the proposed framework to forecast the adoption of autonomous vehicles (AVs) in Nashville, USA. The consumer behavior model is calibrated with a stated preference survey data of 1,495 Nashville residents. The output of the agent-based model provides the effect of the purchase price, post-purchase satisfaction, and safety measures/regulations on the forecasted AV market share. With an annual AV price reduction of 5% at the initial purchase price of $40,000 and 90% of satisfied adopters, AVs are forecasted to attain around 85% market share in thirty years. These findings are crucial for policymakers to develop infrastructure plans and manufacturers to conduct an after-sales cost-benefit analysis.