Economic perspectives on the development of complex products for increasingly demanding customers

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Title Economic perspectives on the development of complex products for increasingly demanding customers
Author Earl, Peter E.; Wakeley, Tim Michael
Journal Name Research Policy
Year Published 2010
Place of publication Netherlands
Publisher Elsevier BV
Abstract Rival firms produce products with a variety of characteristics. It is typically assumed that consumers purchase those products that most closely match their ideal set of characteristics. Orthodox production theory economics offers no analysis of how to divide limited product development budgets between different characteristics. Furthermore, orthodox consumer economics assumes buyers make compensatory trade-offs between different product characteristics; this approach ignores problems caused by bounded rationality that, in complex choice environments, leads buyers to formulate simplifying heuristics such as hierarchical (non-compensatory) preferences over characteristics. An integrative analytical framework is developed, drawing upon orthodox economics, behavioural economics and evolutionary economics. Implications for the relationship between incremental product development and the firm's evolving capabilities are emphasized.
Peer Reviewed Yes
Published Yes
Alternative URI http://dx.doi.org/10.1016/j.respol.2010.05.006
Volume 39
Issue Number 8
Page from 1122
Page to 1132
ISSN 0048-7333
Date Accessioned 2011-02-08
Date Available 2011-03-07T08:53:12Z
Language en_AU
Faculty Griffith Business School
Subject Economics
URI http://hdl.handle.net/10072/36856
Publication Type Journal Articles (Refereed Article)
Publication Type Code c1

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