Agent-based simulation of consumer purchase decision-making and the decoy effect

Abstract

Consumer behavior research involves various areas: psychology, marketing, sociology, economics and engineering. This paper presents an agent-based model (ABM) of consumer purchase decision-making. The core of this model is a motivation function that combines consumers' psychological personality traits with two important kinds of interactions in a competitive market. The model reveals the inner psychological mechanism on the basis of which consumers make their choices when facing competing brands on the market. By creating a large number of heterogeneous consumer agents in an artificial market, this study uses multi-agent simulation (MAS) to exhibit the emergent decoy effect phenomenon, which is a market dynamic phenomenon originating from the individual behavior of heterogeneous consumers and their interactions in the real-world complex market. The combined use of the ABM and the MAS method in studying consumer behavior and markets gives one the potential to cope with the dynamic changes and complexities in the real-world business environment.