Waiting – The Power of Lines
When you think of long lines there are a variety of feelings that come to mind – anxiety, excitement, frustration – the list goes on. Long lines can often be a source of dread, but when managed efficiently to reduce frustration there can be some enticing economic benefits.
An information cascade is formed when an individual is faced with a binary decision influenced by external factors. Lines pose a question – to join or not to join? As the length of a line increases, the answer to this question becomes heavily influenced by external factors. A long line represents a barrier to entry, but this barrier creates a “hard to get” effect. By raising the barrier to entry, the end result often becomes more desirable.
Tourists walking through the streets of SoHo in winter might stumble upon a line wrapping around the block leading up to Dominique Ansel bakery. Not knowing much about the bakery, tourists will often make positive assumptions about the quality of the bakery given the high barrier to entry. Customers of the bakery will often wait over an hour in subzero temperatures for the chance to buy pastries. Tourists will assume that customers waiting in line are acting on private information, for example, positive past experiences. Thus, tourists will often feel compelled to join the line – making the line even longer and perpetuating the cascade. The decision to join the line will ultimately have a positive effect on the business.
Businesses have noticed the economic benefits associated with long lines. In 2008, one cellular network provider in the UK paid employees to wait in lines for the new iPhone 3G. While the act was quickly discovered, it proved to have positive effects on the cellular network’s business. However, a similar effect may have been achieved by educating consumers on the value of the product, rather than deceiving them.
Ultimately, lines have powerful psychological and economic effects, though without a quality product at the end of the line, its power will not last.
My discussion above is in response to the following article: