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A Theory of Fads, Fashion, Custom and Cultural Change as Information Cascades

Paper Link: https://www.jstor.org/stable/2138632

This paper is closely related to the topic we discussed in the lecture: Information Cascade. This paper not only explains the development of uniform social behavior but also analyzes why the convergence of social behavior can be idiosyncratic and fragile. I want to specifically talk about an example about fashion and how a few early individuals can have a disproportionately effect and finally start a new fashion trend.

According to the Fashion Leader scenario, person 2 would make the decision based on the first person’s signal. There will be 3 scenarios: 1) the second individual infers the fist individual’s signal and ignores his own information 2) if the first individual’s precision is higher, the second will defer to the first individual’s choice 3) if it is slightly lower, the second individual will make his own decision. In reality, if several fashion icons on campus decide to start a new trend, it is very easy for them get a lot of followers. Therefore, early community leaders are very important.

For example, the paper discussed one example: whether “pink is in” or whether a short skirt is acceptable this season depends on who else decide to adopt the fashion. It is also very important that individuals are trying to forecast others’ actions. Moreover, consumers also expect a new season to introduce new clothing fashions. During annual runway shows, it is a great opportunity for different brands to introduce new fashion trends to the public. This paper also introduces a new possibility which is there may be two completely opposite cascade in two different countries. In this case, some fashion bloggers who travel globally may see two different cascade and use his own influential power to break one of the two cascades.

Besides fashion industry, information cascade model also applies in different fields. Individuals can invest in obtaining new information and also later individuals imitating the early ones. An important extension of the model would allow individuals to have “heterogeneous but correlated values of adoption”. If others’ decisions are less relevant, cascades may begin later and be less likely to occur.

 

Citation: Bikhchandani, Sushil, et al. “A Theory of Fads, Fashion, Custom, and Cultural Change as Informational Cascades.” Journal of Political Economy, vol. 100, no. 5, 1992, pp. 992–1026. JSTOR, JSTOR, www.jstor.org/stable/2138632.

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