Information Cascades in the Movie Box Office
https://www.sciencedirect.com/science/article/pii/S0165188900000373
In this paper “Quality signals in information cascades and the dynamics of the distribution of motion picture box office revenues” authors Arthur De Vany and Cassey Lee examine Information Cascades in the context of the movies. Movies are a good choice to examine information cascade models, because the authors could look at box office revenues to see how many people were actually going to see the movies. It’s also a fair assumption that most agents in the ‘potential movie goer’ network are getting information from their peers and word of mouth about the movies, while also seeing box office results. The movies are also an example of a situation in which consumers have multiple choices, rather than just the two that most information cascade models assume. De Vany and Lee set out to see if information cascades occurred in the movies, when people have multiple options. They also incorporated the ideas of quality and quantity of the information given to consumers into their research. They compared box office results to see if they followed the predictions of information cascade models, as well as comparing real results to the conclusions of an agent based model they developed themselves.
I thought this paper addressed some really interesting things about information cascades and things that I had wondered themselves. The paper talks about the simple two choice model we discussed in class where each agent has only the choice to accept or reject a behavior and then goes into how they extended this model to make it more realistic to real life. Some things that they incorporated to their updated model were multiple choices and the quality of the information that people were getting. Although I didn’t fully grasp the mathematics of everything that they did in their updated model, the ideas they were trying to incorporate and questions they were trying to answer made sense and were even things I had wondered myself. The model we examined in class was certainly interesting but it is so simple that it I would think it often wouldn’t reflect real life. When we were learning about the model I definitely thought about how in real life a person will have certain information that they trust more than other information and that in most situations people have more than two options. The paper concludes that information cascades with competing choices do not occur at high frequency. This makes sense to me, because there are so many different factors that contribute to a consumer deciding between what movies to see, which includes personal preference which can vary widely from person to person.