As was previously discussed in class, diffusion in networks is a phenomenon that can be modeled mathematically- by taking a diagram of linked nodes and adding the concept of threshold to it. What happens in some cases (like in the infinite linear chain) is that the cascading effect leads to everyone adopting the idea/trend that is being diffused.

An interesting study at the National Bureau of Economic Research relates information diffusion to stock purchases: Information Diffusion Effects in Individual Investors’ Common Stock Purchases: Covet Thy Neighbors’ Investment Choices. Linking stock purchases with information diffusion, this paper is indeed worth a read.

The factors that drive individual investors to purchase specific stocks is still largely unknown; in knowing more information we can model situations better. The study, which takes information from a real source just like Kossinets and Watts did with emails from Columbia University, through an unnamed “discount broker”, concludes that neighbors living in geographical proximity take to make similar decisions when purchasing stocks.

And just like the people in Columbia University were more likely to know each other if they took classes or had mutual friends near a threshold number, in this case the threshold was physical: 50 miles.

It is very interesting to see how concepts being learned now somehow relate back to what we learned at the start of the semester, and can compliment it nicely.