In 1995, the two management consultants who wrote the book Discipline ordered 10,000 plus copies of their book from many small bookstores scattered across the country [1]. Likewise in 2002, David A. Vice a reporter for the Washington Post ordered 20,000 copies of his book from BarnesandNoble.com and later returned 17,500 of them[2]. The obvious questions that arise is why would someone want so many copies of ones own book and secondly why didn’t the authors order the books directly from their publisher. These questions can be best answered by the theory of information cascades which was discussed in class this week.
What are Information Cascades?
Information cascades occur when individuals modify their own choices based on the choices of others. A misconception about herding or information cascades is that it is irrational. Herding behavior can propagate both valid or invalid information but it reflects individuals making decisions rationally based on limited information. Individuals may choose to follow the crowd because they believe the crowd knows more than their do. For example, perhaps an individual lacks the time and expertise to research which candidate to vote for, so they decide to vote the same as their friends.
Cascading decisions can result for two reasons. First people may imitate the decisions of others for informational reasons. They may believe that a choice is popular because more people have found it to be better. Secondly people may imitate others because of a direct payoff due to the popularity of a product. For example, reading a popular book allows one to converse at a party or seem current. Such phenomena are sometimes are called network effects.
To become an information cascade a few criteria have to be met. First sequential choices where people can observe the actions of all previous choices is required. Second, decisions or assessments have to be binary with only two choices possible. Why binary choices are required for cascades and examples of the blind leading the blind are explained in a New York Times Blog [3]. Lastly, the payoff must be uncertain otherwise people would always pick one of the choices.
Cascades and Bestseller Lists:
The authors described above realized the importance of hitting the New York Times bestseller lists and hence their strange purchases. These lists can become a self-fulfilling phenomena with the benefits of increased prominence and further sales resulting for listed books. Thus by channeling their purchases for the book Discipline to many small bookstores tracked for the bestsellers lists, the authors described were able to artificially boost their rankings.
With the advent of the web, gaming these such rankings has become much more commonplace. A Wall Street Journal article talks about how one PR firm, Ruder Finn, claims it can boost the rankings of books on Amazon.com and BarneandNoble.com for a fee of $10,000 [4]. The fact that most books sell less than one copy a day on Amazon.com combined with the short term nature of these rankings(refreshed every hour) makes them particularly volatile and vulnerable to manipulation. One author for example convinced his fans to purchase his book on one day and at the same hour to maximize the jump in the rankings hoping to gain prominence. Ruder Finn for its fee has popular authors to recommend the new book on many email lists and offers free goodies along with purchases to customers as enticements.
This probably brings up the question, shouldn’t the best books get to the top by themselves? Many arguments show why this may not necessarily be the case. One reason is the difficulty in judging the quality of a work. This is illustrated by the many classics that were turned down by many prominent publishers before getting published. One reason measuring the quality of books can be so difficult is because people don’t know precisely what they like [5]. Instead they are often searching for the best which by definition is what other people like and think is the best.
The randomness involved in popular products was illustrated by an online experiment described in the article “Is Justin Timberlake a product of Cumulative Advantage?” The experiment showed that on different runs of the experiment, different songs became the most popular. It was found that people tended to pick their favorites based on the most popular songs. Thus some good luck early on could be amplified by herding behavior resulting in a low quality song becoming most popular. For example, a song found to have middling quality placed 1st in one run and then 40th in the next run. Thus the experimenters argue, in the cultural marketplace there is much uncertainty about which products will turn out to be blockbusters and which will not.
The randomness inherent in the selection of successful products by consumers in the marketplace means it makes sense for authors to push their product. Jump starting the momentum behind a book, having favorable early reviews or increasing its visibility by pushing it in an influential top-seller list may give it the momentum necessary to become a cultural phenomenon and a blockbuster. The recognition may in turn make the author more famous and future books more visible. This explains why many authors and literary agents spend so much time, money and effort trying to build a buzz for their books.
1: Stern, William. “Did Dirty Tricks Create A Best-Seller?” BusinessWeek. August 7, 1995
2: Kirkpatrick, David D. “Author’s Attempt to Promote Book Backfires”, New York Times, March 6, 2002
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