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Understanding Information Cascades in Social Influence Networks

This text explores the dynamics of information cascades within social influence networks, highlighting how individuals' decisions about opinions, purchasing behavior, and activities are interconnected. It discusses the herding phenomenon, where people mimic others' choices based on limited observations. The text details an experiment involving red and blue marbles to illustrate decision-making under uncertainty. It concludes that structural conditions can lead to non-optimal outcomes, yet large sample sizes tend to achieve high accuracy. The concepts are pivotal for understanding social behaviors in various contexts.

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Understanding Information Cascades in Social Influence Networks

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  1. Network Theory and Dynamic SystemsInformation Cascades Prof. Dr. Steffen Staab

  2. SocialInfluence • People connectedby a networkinfluenceeachother • Opinions • Buyingbehavior • Political positions • Activitiespursued • Technologies used • ...

  3. Herding / Information Cascade • Choosingbetweentworestaurants • Onefull • Oneempty • Rational inferencesfrom limited information

  4. Cascading Effects Informationaleffect • Imitatingotherbehaviorsassumingtheyknowmore • Restaurant • Lookingupintosky • Reading a popularbook • Joining a fashion Direct-benefiteffects • Network benefits • Having a telephone • Using email • Joiningfacebook Mutual support: Joining a recommendedoperatingsystemmayimplyeasierexchangeoffileswithothers In conflict: Joining a popularrestaurantmayimplywaiting in a longline

  5. Assumptions • Decisiontobemade • People makedecisionssequentiallyandobserveotherswhohavemadethe same decisionbefore • Eachpersonhassome private information/preferenceinfluencingthedecision • A personcannotobservewhatothersknow, but onlywhatothersdo

  6. Simple Herding Experiment (Anderson&Holt) • Urnwithredandbluemarbles • Studentsaretold: • Eithertheurnhastworedmarblesandoneblueone • Ortheurnhastwobluemarblesandoneredone • Studentsareinstructed: • Tocomeone after theotherandrandomlydraw a marble • Tolookatthemarble, but not toshowthemarbletotheothers • Tomake a guessaboutthenumberofredmarbles • Toannouncetheirguess • Studentsaretoldthatsuccessfulguessersarerewarded

  7. Tocomeone after theotherandrandomlydraw a marble • Tolookatthemarble, but not toshowthemarbletotheothers • Toguessaboutthenumberofredmarbles • Toannouncetheirguess • Decisiontobemade • People decidesequentiallyandobserveotherswhohavemadethe same decisionbefore • Eachpersonhassome private information • A personcannotobservewhatothersknow, but onlywhatothersdo

  8. Effect 1. BLUE RED RED symmetricto BLUE, Let‘sonlyconsider BLUE

  9. Effect 1. BLUE RED 2. BLUE 3. BLUE 3. BLUE

  10. Effect 1. BLUE RED 2. BLUE 3. BLUE 3. BLUE 4. BLUE 4th studentknowsthat 3rd informationisuseless, thus he onlytruststhefirsttwopiecesofinformation...

  11. Effect 1. BLUE RED 2. BLUE 3. BLUE 3. BLUE 4. BLUE 5th studentknowsthat 3rd and 4th informationisuseless, thus he onlytruststhefirsttwopiecesofinformation... 5. BLUE

  12. Effect 1. BLUE RED 2. RED 3. BLUE 3. RED The firsttwoannouncementscreate a tie, hencethe 3rd studentreliesonly on hisownmarbletomake a guess

  13. Effect 1. BLUE RED 2. RED 3. BLUE 3. RED The firsttwoannouncementscreate a tie, hencethe 4th is in a likewisesituationasthe 2nd student

  14. Effect 1. BLUE RED 2. BLUE 2. RED 3. BLUE 3. BLUE 3. BLUE 3. RED 4. BLUE Information Cascade 5. BLUE

  15. Conclusion on informationcascades • Structuralconditionsleadtoinformationcascades • Information cascadesleadtononoptimaloutcomes • Wrongguessingmorelikelyto happen withchance >1/9 evengivenvery large numberofstudents, • while a large sample in generalachievesextremelyhigh accuracycloseto 100% • Cascadecanbeoverturnedbytwonewpiecesofinformation

  16. Klaas Dellschaft • Influenceoftaggers on othertaggers

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