What is Information Cascade?
Information cascade is referring to the effect that people's decisions being affected by the choices of a large group of people, particular when people make decisions sequentially.
For example, when people decide which products to buy, the best selling product often attracts more customer. The agent followed the decisions of other customers.
Information cascade occurs when:
- Agents make decisions sequentially
- Agents make decisions rationally based on the information they have
- Agents do not have access to the private information of others
- A limited action space exists (e.g. an adopt/reject decision)
Information Cascade in Social Media
From the lecture, an experiment in Facebook was introduced to test the effect of information cascade in social media. The result showed the effect did happen.
Actually not only did it happen in experiments, it also affected the voting rate of 2012 US president election.
In US president election 2002, Facebook launch a new feature called "I'm Voting". When a user pressed the button, his/her friends will see the "I'm voting" button appeared on the user's top newsfeed.
Election fulfilled the four condition required for information cascade.
- Voters vote sequentially
- Voters make their decisions (vote or not? who to vote?) rationally
- Voters do not have the full picture of the decisions made by others
- The action space is limited
Thus, in theory, information cascade can happen. In fact, study found out it boosted the turnout rate by 2.2%, proving information cascade did happen.
So what?
The experiment and the real life case showed the power of information cascade in social media. Its influential power far exceeds traditional media. I can predict that the different parties will shift more and more attentions from traditional media to social media. A lot of opportunities are awaiting to be dug out.
It is a very interesting case study on information cascade. and the result is the turnout rate increase 2.2%.It show its powerful affection on the voting. So the social media is very important that can influence the result of the voting.
ReplyDeleteTrue. 2.2% is very impressive.
ReplyDeleteLet's see whether the candidates in the next election in Hong Kong will try to make more use of this powerful tool.
It's interesting to see your illustration of information cascade with election on twitter. The blog helps me to get a better idea of information cascade :)
ReplyDeleteThanks for the case study. It is good and I got the concept of information cascade from it.
ReplyDelete"information cascades." A bunch of complex, abstract math attempting to quantify intangible, but common-sense, behavioral phenomena. This was one of those topics that added to my suspicions that a major in economics was really a major in spending oodles of money to watch my professors obfuscate the obvious.
ReplyDeleteThanks for your sharing. I think the situations that information cscade occurs your have talked about is really clear, and then, you have analysised the election in this four situations. I learned a lot from it.
ReplyDeleteYou introduce the concept of information cascade and give some typical examples. Thanks. Social media is actually having larger and larger influence. It is necessary to study this phenomenon and analysis its pros and cons.
ReplyDelete