Sonia Morgoni, Luisa Nicco

Computer Science and Simulation for Economics

Project work on

"Network economy."


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created with NetLogo

view/download model file: network_economy.nlogo


This work aims to study the effect of network economies. The focus points are:
1) to analyze the diffusion process of a product,
2) to determine the critical mass of snob that reduces the cycle.


We represent 3 kinds of consumers:
1 - early-adopters : they are named " first consumers" because they already possess the product;
2 - snobs: they "snob" the product, they emulate early-adopters and generally everyone else with a very small probability. They represent the effect of a negative network economy;
3 - majority: they have an high probability to emulate other consumers. They represent the effect of a positive network economy.
When an agent meets an other agent on the same patch, in every instant, it can copy or snob.


The observer chooses the number of consumers using the slider on the interface.
In the same way, the observer is asked to set the quantity of the product and the probabilities to copy the behaviour of the majority or the snobs.
The observer has to click on the “setup” button in order to set the world for the simulation. At any time the world is heterogenous, in fact we can see 3 kinds of agents generated in a casual way.
The simulation starts when the “go” button is clicked. Consumers move around the world and hey emulate the others depending on the probabilities set. To express the emulation, consumers change their shirt colour depending on the kind of consumer they are copying.
The simulation stops when the diffusion process ends.


The diffusion process of the product will have different dynamics modifying the percentage of early adopters, majority and snob.
The "critical mass" of snob depends on the number of early adopters: the process does not end when there is a small number of early adopters and an high number of snob, while if there is an high number of early adopters and a small number of snob the diffusion process is fast.
To evaluate the effect of the price constraint the user can choose different values for the product price and the product value. If the product value is higher than the price the dynamic of the process does not change, but if the product value is lower than the price, consumers cannot buy the product. In the last case the process will be more long.


It could be interesting to vary the level of sliders on the interface and notice what happens. Users can change the parameters described above :
- total number of consumers,
- ranges defining consumers breed,
- probability to emulate majority,
- probability to emulate snobs,
- price of the product,
- first evaluation of the product.


The model can be extended by introducing different products and other variables such as wage that could affect the behavior of the consumers.


This simulation is inspired by models in "NetLogo Models Library".


This simulation is based upon the general concept about the network theory and the viral marketing.
This model has been created after attending the course “Computer science,simulation and economics”, held by Professor Pietro Terna, at the Faculty of Economics, University of Turin.