What scares me most about information cascades is our society’s complete reliance on what we hear. Like one of our childhood rumors we let the decisions of others guide us almost blindly and take what is said for granted without a second thought. As I think about some of the products that have recently been released I can’t help but wonder how much of their success was due to information cascades and whether or not the success (or failure for that matter) is justifiable.

The battle between Blu-Ray and HD DVD illustrates perfectly what I mean. While the battle is essentially over now, when asked in the past I would always throw my support towards Blu-Ray. If asked why I felt that way I could rattle off a list of facts and figures and would most likely comment on the better quality relative to cost. Yet in actuality I am completely uneducated about these products. I have admittedly not seen anything on Blu-Ray nor have I ever seen anything on HD DVD, and I can’t really say anything about quality relative to cost with any certainty. What’s more, I am certain that I have influenced at least five individuals to purchase Blu-Ray products on these false bases.

The release of Microsoft Windows Vista is another perfect example, only in this case I actually do have some experience with the product. Prior to every using Vista I was told by numerous people that it was slow and it crashed often. Some even went so far as to joke about how they had Vista and they were upgrading to Windows XP. So I found myself thinking that if this is the general consensus then it must be true, and today I am hesitant to purchase a new computer that runs Vista. It’s not that simple of course, because my specific observations contradict what everyone has been telling me. I have had the opportunity to use Vista on several occasions, and have yet to have any problems with crashing or slowdown. In fact I have been more than satisfied with the product. And yet, I am still hesitant to buy it because of the large opposition. As far as I am concerned there must be something wrong with it that I am just not seeing.

Looking back, I have begun to think about all of the products I have ever purchased and how many of them I purchased based on my own information (not many). I can only imagine that most people are like me and don’t conduct much of their own research when looking into new products. And if no one is doing any research, then the value of information cascades is useless. Regardless of whether the group consensus is right or wrong, information cascades are not a substitute for personal research, yet in our society this seems to be the norm.

The idea of information cascades influencing new product releases can be found all over the web from the release of Vista to new movies in the box office. Below are just some of these articles:

Information Cascades, Randomness, and the Movie Business by Paul Kedrosky

Information Cascades in the Adoption of New Technology by Eric Walden and Glenn Browne

Code Igniter vs. Cake PHP by Joe Rosenblum