Fad Setters pick a fad that has utility value V. They will keep this product, receiving a value of V in each time period. When the number of Fad Followers reaches SFS, the switch value defined above, they will leave this good, ending their role in the current fad. Fad Followers look at the goods their neighbors have, and if the utility value of one of the goods is higher than their present good, they will acquire that good. If the values are lower, they will remain with their present good. Each good the FF sees has a probability of being a Fad Setter good.
This probability depends on how many other agents have already acquired, and still maintain, the FS good. Regardless of whether the good they see is the Fad Setter good they seek they always pick the highest valued good they see. Fad Followers continuously search for higher valued goods, and all Fad Followers choose simultaneously, based on the good their neighbor had in the last time period.
If the Fad Setter leaves in a time period, then the good immediately begins to decay. After the good’s utility value drops below TFF, the FF’s threshold, the Fad Follower will leave the good. This threshold is different for every Fad Follower. Below is a graphical representation of this process, illustrating the effect of the interaction of the agents on the good’s utility value for both the Fad Setter and the Fad Followers.
Replaced/Superseded by document(s)
Throughout society there are instances of seemingly irrational imitative behavior, or fads. Everyone can identify a fad when they see one yet there is no comprehensive economic theory to explain their origins or demise. There are several theories that discuss why people replicate the choices of other agents in the economy, but none that are specific to the lifecycle of a fad. This paper is able to specify the conditions under which a fad develops. We present a model that analyzes the interaction of several types of agents in a complex market environment, from the initial product choice, through the period of peak popularity, to the eventual demise of the fad.