Abstract: This paper develops an alternative interpretation of the Bass model of innovation diffusion, positing it as a linear combination of two independent utilitarian decision rules, specifically those of Luce and McFadden. The mathematical relationships between continuous and discrete time-series Luce, McFadden, and Bass models are derived. The differences between the continuous and discrete versions of the Bass model are explained, including those of the Luce and McFadden variants of the Bass model. The historical literature on Bass model estimation for consumer durables is reviewed. The Bass model is applied to Walker’s data on the diffusion of policy innovation among the American states. Differences and similarities between the mechanics of individual and public choice as an explicit function of time are discussed.

Key words: diffusion of innovation, qualitative choice, public choice, decision theory, utility theory, time-series analysis.

JEL Classification:

A12 - relation of economics to other disciplines
C12 – hypothesis testing
C16 – specific distributions
C22 – time-series models
C25 – discrete regression and qualitative choice models
C44 – statistical decision theory; operations research
D78 – positive analysis of decision making and implementation
O33 – technological change; choices and consequences; diffusion processes

Back to Schedule