Negative Impacts of Information Cascade
http://globalguerrillas.typepad.com/globalguerrillas/2008/09/journal-informa.html
The journal in the link briefly describes the information cascade mechanism and then illustrates the negative impacts of information cascades on our lives by giving two real life examples. The first example explains why the financial industry can be so hopelessly lost. Some people followed the seemingly correct economic models in the beginning, which started an information cascade and kept attracting other people to believe in. As time going by, more and more people got involved in the huge information cascade until the “black swan” came and the information cascade collapsed. The second example calims that information cascade can affect warfare. As government claims their success in the war, information cascade will start and grow and finally lead to another warfare.
Although the information cascade in this journal is much simpler than the information cascade system we learned in class, the concerns raised by the author are still worth considering. Nowadays, because of the development of high speed Internet, information spreads faster than ever. Therefore, it is easier for information cascades to form and grow. As more and more people get involved in the information cascades, it will be harder and harder to discover the truth buried by the numerous wrong signals and when the information cascades collapse, the result could be disastrous. Sadly, sometimes even if we know the information cascade might have negative impacts, we still can’t change it. It’s true that compared to the number of people involved in the cascade, the power of any single individual is too weak. Perhaps the only thing we can do is to keep clear in our minds and try to avoid falling into bad information cascades.