A study published earlier this year in the Proceedings of the National Academy of Sciences by Antonio Rangel of the California Institute of Technology indicates that humans have evolved subconscious mechanisms relating to information cascades.  Dr. Rangel conducted a study in which a group of volunteers was asked to drink and rate the taste of 5 different wines ranging in price from $10 to $90 a bottle.  In reality, the volunteers only tasted 3 different wines.  Two of the five were repeated but listed with different prices. 

In the past similar studies have shown that given a survey, humans will invariably rank (what they think to be) more expensive items as being of higher quality.  What made Dr. Rangel’s study unique was the fact that he used functional magnetic-resonance imaging to look at the volunteers’ medial orbitofrontal cortices.  Basically by measuring this brain activity, Dr. Rangel was able to see what his participants “thought” about the wine’s quality rather than just observing what they said in a survey.  Therefore he was able to measure the volunteers’ visceral subconscious opinions.

The results showed a strong correlation between brain activity and the price the volunteers were told.  This would indicate that people actually “enjoy” a wine more if they are told it’s more expensive.  Dr. Rangel repeated the experiment with the five supposedly different wines but this time he didn’t tell the volunteers any prices.  In this control group, the brain scanner showed differences between the three real wines but not between the repeated wines.

To account for criticism that “his volunteers were not wine experiments” (and to take a jab at a rival school), Dr. Rangel repeated the experiment with the Stanford University Wine Club.  This experiment yielded similar results to the non-wine expert group.  Again volunteers showed more brain activity when they were told a wine was expensive.

This study presents an interesting question:  How can a wine expert’s brain chemistry change simply upon being told a phony price?  Dr. Rangel believes the answer could lie in the evolutionary process.  “The point of learning is to improve an individual’s chances of surviving and reproducing: if the experience and opinions of others can be harnessed to that end, so much the better.”  Essentially, properly harnessing information cascades produces an evolutionary boost. 

In many cultures (but especially in a capitalist economy), price is set by the market or the collective wisdom of the masses.  By adjusting brain chemistry according to price, the mind is rationally inferring that a product deemed more valuable by society must, in fact, be more valuable.

This study shows that information cascades are based, at least in part, in our subconscious as an evolutionary construct.  We now know that humans try to imitate on a more basic level than action.  They try to imitate enjoyment. Our brains actually make an effort to imitate what “the crowd” feels. 

Reference:

http://www.economist.com/science/displaystory.cfm?story_id=10530119