An information cascade results from people making decisions based on the decisions made before them. An example of this is when someone chooses the brand name product as opposed to the private label one simply because fewer boxes of the brand name are left on the shelf. The private label brand is cheaper but the person assumes that the consumers before them knew something that they did not. Choosing the brand name becomes the “safer” option since it is chosen more frequently and trusted by consumers. This apparent risk factor is analyzed in the paper by Itamar Stimonson and discussed in more detail at http://www.gsb.stanford.edu/news/research/mktg_simonson_consumercompare.shtml. In this article, Stimonson’s research reports the different outcomes when consumers are implicitly or explicitly instructed to compare a product with its neighbors. When the consumers were implicitly given price information in an auction setting, they used the neighboring bidding prices to determine whether or not to raised their own offering bid. On the other hand when consumers were directed to make these comparisons, they became less willing to adjust their opening bid prices. This demonstrates how the increase in risk awareness caused the bidder to be more prudent with their price. This conclusion can be related back to the topic of information cascades reinforcing how decisions are affected by comparing alternatives. In fact, it appears that advertisers could make an information cascade occur more quickly if they do not make the comparison explicit. In this way, people will instinctively chose the option that appears more favorable at first glance, which tends to be what the majority has already chosen. Instead if the advertiser forces the comparison, the consumer may become more suspicious and less willing to make the purchase. Therefore, it is possible for a consumer to not get caught up in an information cascade despite the advertiser’s forced effort to highlight a favorable comparison.

In class, we talked about the Web as a network. We also mentioned that much information on the Web is not indexed by search engines and is part of the internet’s “dark matter.” This content is also known as the deep Web, invisible Web, hidden Web, or Deepnet. The deep Web consists of:

• Dynamic and scripted content - pages created on the fly in response to some request or pages accessible through JavaScript of Flash links
• Unlinked content - pages that contain no in-links
• Excluded content - pages that prohibit search engines from crawling them
• Non-HTML content - content other than Web pages is often considered part of the deep Web

The popular search engines like Google, Yahoo, and MSN index the surface Web and some of the deep Web. These search engines have been getting more sophisticated in terms of handling content other than standard HTML pages (such as indexing pdfs, docs, and other filetypes), but still leave much of the deep Web untapped.

Much of the deep Web content is stored in databases and can be queried with web front ends (such as searching nytimes.com for archived news articles), but each site must be searched individually. Some Web sites that can search these deep Web sites are popping up. They work by coalescing search results from many databases. An example is Pipl, a people search engine, brings together results from MySpace, flickr, Amazon, the Securities and Exchange Commission, and other resources to present comprehensive list of results for a given person.

This week, the USA Today printed an article titled “Princeton leads in grade deflation,” which addresses grade inflation at American universities, specifically, the Ivy League. I hope to show that Cornell should follow Princeton’s lead by discussing how inflation starts, why it is hard to leave, its consequences, and a potential fix.

The start of grade inflation is not surprising when looked at through a cascade clean lens. At any given time, one school has an incentive to boost its average grade because inflation will make its students look like stronger candidates for competitive positions in industry and in graduate school. Once a university takes the initiative, the rest will follow cue so they aren’t left behind. Pretty soon, you have average grades of A- and A.

When you’ve reached a point where inflation is occurring, you’re really in a bit of a pickle. There’s not much incentive for a unilateral deviation. Why should one school reduce the grades of all its students and make them look worse when no one else is doing it? One response to this is that people will know you are tougher and therefore treat your grades more seriously. Yeah, ok, but how in the world do you make such an adjustment? Another problem is generational. If deflation were to suddenly take place, the people from the pre-deflation era win because their transcripts look better. This should start protest from the first few generations of deflation, thereby putting deflation to an end.

There are a few important consequences of grade inflation that come to my mind. The first is that companies and admissions committees are forced to weight other aspects of an application more to determine applicant quality. The main two are letters of recommendation and test scores. We can pretty much throw out letters as a great discriminator (except for those that come from a high ranking person), since almost every letter will be positive because, in most cases, a recommender will not write for you unless he or she has nice things to say. What you’re left with is test scores.

An emphasis on test scores. Bad test takers should cringe at the sound of this. They should be deflation zealots. Somewhat surprisingly, good test takers are not made worse off by deflation, despite the potential reduction in test score emphasis. In a study by Professors Talia Bar and Asaf Zussman of Cornell University, it was found that the most talented students (i.e. those with high test scores) are less drawn to classes with high median grades. These 1600 prodigious prodigies should therefore not mind deflation, since their currently hard earned B’s look bad in comparison to the A’s of other students.

Another consequence of grade inflation is a warped drive and a potential loss of academic curiosity. If everyone is getting A’s, receiving a B becomes disaster. Motivation for an A is thus somewhat driven by fear. The drive for an A should be fueled by a desire to stand out in a good way, not by a fear to stand out in a bad way. Academic curiosity is also reduced. If B’s are bad, there’s no reason to take a class out of your comfort zone and risk getting one.

Hopefully it can be seen that the only losers of deflation are lazy people who get bad grades and have low test scores. That’s fine, they should be the losers. The winners are the hard workers with good test scores. That’s also fine, they should be the winners. Now, how do we start the deflation? Collective action seems to be the way to go. Like the USA Today journalist stated, the rest of the Ivy League should follow Princeton’s footsteps by restricting the amount of A’s given out. It was said that Princeton restricts the amount of A’s to an average of 35% across departments. Everyone else in the Ivy League should do the same through a formal pact. I will leave the details and enforcement of this for another day.

Link to paper by Professor Bar and Professor Zuzzman:

http://www.ilr.cornell.edu/cheri/wp/cheri_wp61.pdf

References:

Bar, Talia and Asaf Zussman. Quest for Knowledge and Pursuit of Grades: Information, Course Selection, and Grade Inflation at an Ivy League School.

Bruno, Laura. “Princeton leads in grade deflation.” USA Today. Wednesday, March 28, 2007 9D.

http://www.latimes.com/features/printedition/magazine/la-tm-random27jul02,1,1850294,full.story?coll=la-headlines-magazine&ctrack=1&cset=true

It is a mystery to the even biggest Hollywood producers why some films that have 100 million dollar plus budgets fail while films sporting just a 60,000 dollar budget, such as the Blair Witch Project, go on to make millions.  A Los Angeles Times article entitled “Meet Hollywood’s Latest Genius” theorizes that it is the information cascades that occur amongst the viewing audience that causes a film to fly or flop.  To demonstrate this theory, Arthur De Vany, a retired economics professor from UC Irvine, uses the concept of an ever changing selection of breakfast cereals to represent films.   Given a large number of cereals, certain cereals will over time enjoy more success.  This is based on the principal that once an individual randomly finds a cereal they enjoy, they will go on to tell their friends about the cereal, causing them to try the cereal, etc, causing an informational cascade resulting in that particular cereal gaining in popularity.  However, over time people will become bored with this cereal, causing a new cereal to take its place with a new informational cascade occurring.  Films, De Vany says, operate on the same principles.  When someone sees a film they enjoy, they tell their friends about it who in turn see it and then tell their friends.  The success or failure of a film is largely dependent on positive or negative opinions put forth by those who have viewed it.

 Information Cascades are essential to the world of Hollywood.  The very existence of film critics is testament to this.  Here, you have one individual forming an opinion, and then influencing large numbers of other individuals with their opinion.  However, this begs the question as to how these individuals came into a position where their opinion is “powerful” enough to commandeer the opinion of others.  This could be explained by a “reverse cascade” in which, because in the past their opinion was influenced by and thus matched the public opinion, their views are now seen to be representative of the majority and thereby gain weight.

 Finally, while the article focused mainly on the film industry, the concept of information cascades influencing consumer choice can be applied to any industry where many product choices are available to numerous consumers.  Take the auto industry.  Given a BMW and a Mercedes-Benz and enough means for either, consumers who have had friends that spoke highly of their BMW will most likely choose the BMW, while those consumers who know people with negative experiences with BMWs will most likely buy the Mercedes-Benz.

http://sportsillustrated.cnn.com/2007/writers/tom_verducci/03/20/matsuzaka0326/4.html (Begin at paragraph starting with “By 2005…”)

http://jpbpa.net/convention/2001_e.pdf (Starting with paragraph (9) to paragraph (12))

Baseball clubs in Major League Baseball are always trying to out compete each other in order to win a championship at the World Series. This competition occurs not only on the diamond but in the business world as well. In searching for newer and better players, MLB’s long arm has stretched across the Pacific Ocean to Japan, which has a thriving baseball culture. However, it is not quite so easy for an American baseball team to simply sign a Japanese baseball player of their choosing. The MLB and Japan created a policy involving an auction, after the San Diego Padres obtained exclusive rights to a player in 1997 without giving other teams a chance.

First, a Japanese club must declare that a player under the club’s contract wishes to be signed by an MLB club. Then the MLB commissioner accepts blind bids from all of the clubs interested in obtaining the rights to sign player. The commissioner then runs a first price, sealed auction, awarding those rights to the club with the highest bid.

In 2006, Japanese superstar pitcher Daisuke Matsuzaka, in need of a bigger challenge, decided he wanted to move the MLB. His team, the Seibu Lions, announced the decision, and the MLB started the auction. The Boston Red Sox ended up winning the auction with a bid of $51.1 million. However, that number was not their true value for the negotiating rights with Matsuzaka and probably was well above it, meaning a negative payoff. This occurred for two reasons. First, the auction was a first price auction, not a second price, where the dominant strategy is not to bid your true value. Second, the teams involved in the MLB auction were most likely not using independent private values. This was because team A would actually get a negative payoff instead of zero for losing the auction because it would later have to face the winner, team B, in competition for a championship, with their new superstar. The Red Sox placed a “$50 million bid as a hedge against the [New York] Yankees,” their division rival. In doing so, the Red Sox very well may have received a negative payoff in winning the auction for the rights to sign Matsuzaka, but then again, there is always a price to pay for the satisfaction of beating the Yankees.

Information Cascades seem to surround our everyday life. Think about what you’re doing right now, or what you’re wearing right now. Think about how you decided on your current car, or where you live, or even where to go to school. Many people evaluate all of their decisions with at least a minimal of consideration of what others think.

Within the topic of Network Effects, it is worthwhile to note that according to Alexa Web Search, six of the top ten most popular web sites in the US fall are contained by this category. These six, in their respective places, are 3 myspace 5 ebay 6 youtube, 7 facebook, 8 wikipedia, and 9 craigslist. The other four spots are held by Yahoo, Google, MSN and Microsoft Live respectively. Each and every one of the viral sites is useless if you are the sole contributor. They gain value through an increased user base. If I were the first facebook user, it would be in my best interest to recruit as many of my friends as possible so that I could interact with them. Likewise, they would then want to recruit their friends… and so on. During February of 2004, the majority of people probably hadn’t heard of facebook. Now, just slightly over three years later, the it is the seventh most trafficked site on the web and

An excellent example is the current ‘green’ movement going on across the US. It would be hard to pinpoint exactly who started the movement, or where it came about. Some might point to Al Gore, or his debut of An Inconvenient Truth, yet it could just as easily be blamed on global warming movie The Day After Tomorrow, or any other factors. Perhaps it was the release of the Prius, which proved saving the environment could (arguably) be economically viable. Regardless of what “The tipping point” was, so to speak, a new environmentally friendly mentally seems to pervade everyday life. So-called “Solar Homes” are all over the news. The onslaught of electric cars- The Zap Cars, GEM cars, and Tesla Motors is about to begin. “Green” Vehicles abound- Toyota has the Highlander, Camry, and Prius, while Chevy has the Concept Electric Volt, and a Tahoe Hybrid on the way. The list goes on and on…. but a simple glance demonstrates the explosion of hybrid technology in recent years. I have heard alternative energy described as the ‘new’ silicon valley boom.

I sure hope so. I can’t wait for my solar-powered house/car/jetpack.

http://www.nytimes.com/reuters/news/news-myspace-politics.html?_r=2&oref=slogin&oref=slogin

In the New York Times article “Myspace Launches Politics Channel,” the plan for presidential candidates to come out on the Impact Channel on Myspace in an attempt to reach the younger online generation of voters was unveiled.  Political websites already exist, but this channel aims to directly target internet savvy voters by not only getting their attention but also having tools for registration and fund raising.  Myspace creates a social network where people not only keep connections with existing friends, but are able to make new friends based on their webpages; triadic closure of two people occurs through a mutual friend as well.  With features like blog posting and bulletin boards people use Myspace to share information and ideas or to just voice themselves.  Each webpage serves as a node, while friendships serve as the edges connecting them, creating a self contained network within the internet.

Presidential candidates will try to rally support by taking advantage of the already established social network and use it as both as a social and information network.  Once the candidates acquire friends that truly politically support them, they will use these friendships to spread information to emanating out further along the network.  Closure will begin and the reach of the information being spread will grow farther and stronger.  This strategy helps to narrow the focus down to a smaller contingency of voters.  If someone types in a search on political information on a search engine many different pages may pop up from the entire internet; however, Myspace is a self contained network, and if the plan works successfully then many particular people will be exposed to the presidential race.  These individuals might not have been involved enough to vote, but this may sway them to vote simply because of their connections to friends who are politically active online and will pull them into the scene.

http://www.contracostatimes.com/mld/cctimes/news/local/states/california/16893029.htm

Perhaps the most important advancement in the field of advertisement and maximizing revenue from advertising was Google’s innovation to auction off ad spots based on the keywords entered into their search engine. This enabled companies to display their ads only to search engine users who likely had some interest in their product–it would make no sense for a car dealership to spend money on advertising to people who were specifically interested in purchasing used books. This innovation has catapulted Google above all other search engines, and currently accounts for essentially all of the company’s revenue. However, this article mentions that Google is now attempting to apply their principle of auctioning ad spots to the forum of television advertising. This is a potentially highly lucrative endeavor, but the project is still in its early stages, and cable companies are hesitant to allow Google too much power in controlling their advertising.

Ultimately, the plan is to enable different viewers to be sent different commercials at given times during a television program, such that the advertisement sent to each viewer is relevant to his/her particular interests. Initially, such allotment of commercials would be accomplished not by singling out each household but by characterizing neighborhoods based on their demographics and sending commercials tailored to that demographic. For example, in a collegetown, residents would ideally be sent more fast food or beer advertisements than minivan advertisements. The ultimate benefit of such a system is that companies will pay significatnly higher rates for targeted advertisements than ones that are shown to all viewers, because the targeted viewers would be much more likely to purchase the company’s product than an untargeted viewer picked at random. This could enable television and cable companies to earn significantly higher profits from selling advertising and accounts for their interest in allowing Google to experiment with an auction procedure similar to the one it uses to auction advertisements on its web site.

 While the entire endeavor seems logical if not brilliant, so far Google has had minimal success applying its advertisment auction procedure to more traditional media forums (i.e. television and radio). There have been problems selling printed advertisements, and little revenue has been generated through radio advertisement auctions. There remains much money to be made in the television advertising industry, but Google is still far from extending its online empire over the airwaves.

            I’ve never really been a big user of blogs (this post will be my second ever) so I’m not sure if the system that has been set up for us has been successful or not by conventional standards.  That being said, one thing that bothers me about our NSDL resource is that there does not appear to be a great deal of discussion about some of the great ideas that are being thrown out there.  That being said, this is my attempt to provoke some discussion about future means of web site identification so that we may begin to digest one another’s thoughts, rather than leaving that fun to the course instructors.

            Clearly, the volume and diversity of the internet’s web page population has made the design of efficient and productive search engines to be quite challenging.  Even though I now have a better idea about how search engine algorithms work I still can’t seem to ever find anything I’m looking for.  I must admit that I don’t have a very elaborate background in computers or software generation (Matlab is the only programming language I can effectively use) but I was wondering if it would be possible to come up with some sort of system that would help filter information out of web pages.  For example, if someone were interested in creating a page, how helpful would it be for some service, say a new type of search engine, to provide a type of ID tag to accompany the page?  This tag, which would most likely be created by the web site’s creator, could contain information about the title of any articles on the page, any companies which the page represents, any keywords appropriate to the page, et cetera.  Search engines could then consult this information to better filter the results for certain queries.  Obvious problems would include applying the technology to the millions and millions of pages already out there and dealing with the falsification of ID tag information, which would result in certain pages showing up in results for irrelevant queries.  Though the types of hyperlink sorting and matching methods currently in use are quite sophisticated and can be effective for some, I foresee a crippling problem in search engines’ inability to accommodate the demands of the ever growing web page population.  Maybe it’s not a good idea to talk about this stuff so openly, since I’m sure vast amounts of money can be found in effective solutions, but I was just wondering if anyone who is a little more internet savvy agreed with my concerns or had any interesting ideas of their own.

www.Socialight.com is website that allows users to create, share, and discover virtual Sticky Notes placed at specific locations using a mobile phone or the web. Socialight revolves around the idea of location-based information also known as geo-tagging. You can create Stickies which can contain text and photos, and soon will be able to add sound clips and video. You can subscribe to different channels and view rich media listings using your mobile phone. Some ways that it can be used is for restaurant reviews from people that you trust or take a walking tour of virtually tagged landmarks around a city. Socialight can notify you on your mobile phone any time you’re near a Sticky.
This relates to decentralized networks since anyone can add stickies to the map. Information is cascading from the bottom up. The service is creating a network whose locations act as an organizing filter for information. Channels can bring people together who have a common interest in a location. This allows information to potentially cascade more easily. Also, you can control who sees the information, which creates another way to view social networks plotted on a map.