Consumer Purchase Decisions Under Asymmetrical Rates of Technological Advance and Price Decline

Abstract

Prior research has shown that when making high tech purchase decisions, consumers consider not only the relative advantage afforded by currently available products, but also the relative advantage expected from future generation products. Additionally, empirical evidence suggests that prices for high tech products often decline faster than the technology advances. This research takes both these findings into account and investigates consumer purchase decisions for high and low tech products under asymmetrical rates of technological advance and price decline. Although consumers generally prefer the latest technological generation of a product, level of technological sophistication (high vs. low tech), rate of technological change and price decline, and expectations regarding future product introductions were found to moderate the effect of technological generation on preference.