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Information Cascade

Information cascade refers to a strange phenomenon where people tend to follow other people’s previous actions and decisions. In contemporary world, where social media like Facebook and Twitter prosper, information cascade plays even more significant roles by affecting larger and larger population. For instance, if a person makes a blog post on a particular product or even political idea, any person who reads about the post is more
likely to buy the product or support the same political ideology, respectively. Such phenomenon is rather rational, just like most people fall for  effective advertisements by big companies. However, information cascade can sometimes cause arbitrary and dangerous collective action, like revolution.

According to the article, Riots and Revolutions in the Digital Age, information cascade can explain peoples’ collective economic, social and political actions. The article examines a number of current riots such as Arab Spring and summer riots in London. Information cascade makes revolutions and riots take place more easily because it lowers crime equilibrium, meaning the workers will fear less about the following punishments when they realize there are many other people on the same boat.

 

Source:

http://www.isn.ethz.ch/isn/Current-Affairs/ISN-Insights/Detail?lng=en&id=133669&contextid734=133669&contextid735=133668&tabid=133668&dynrel=4888caa0-b3db-1461-98b9-e20e7b9c13d4,0c54e3b3-1e9c-be1e-2c24-a6a8c7060233,40db1b50-7439-887d-706e-8ec00590bdb9

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