Peer-Pressure and Information Cascades
https://well.blogs.nytimes.com/2011/02/03/teenagers-friends-and-bad-decisions/
Information cascades are present when, in a certain situation, one person makes a decision based on the observation of others and fails to stand by his/her personal beliefs. As learned in class, there are three necessary aspects for an information cascade to exist. Firstly, we must be aware that people make decisions in a logical order. Secondly, people have information that they only are aware of. Thirdly, people observe what people do but they do not observe what they are aware of. This article speaks of information cascades when referring to peer pressure. Like mentioned in the article, intelligent and mature children occasionally do unintelligent things when other people, especially friends are around.
In the article, there was an experiment conducted where a group of people, of varying ages, were told to do a certain act alone and then with friends. The research found that for some ages, typically younger age groups, the participants changed their behavior when in the presence of others. Examples include stopping at a stop sign or speeding up at a yellow light. Let’s think of this notion in a similar, more relatable example, while still referring to information cascades. Let’s say, for example, there is this one 18-year old kid who, even though he knows he probably won’t get in serious trouble, he chooses not to drink any alcoholic beverages until he is of age, 21 years old. However, this kid goes to a party where all of his friends are actively drinking, and they want him to play beer pong. Even though this certain kid acts logically, knew that he shouldn’t drink, and saw people drinking (even though those same kids may have been peer pressured into it, as well), he decided to drink alcohol and go stray away from what he believed in. When the kid follows the third aspect, which is observing what people do but not what they know, he merely sees his friends drinking. However, he does not know what they are aware of, which may be that they were peer pressured, too. He only sees them drinking. This is an example of how information cascades are used in a negative away.