Online Herd Instincts
February 28, 2011
A recent article in the Economist points out our susceptibility to herding behavior. By design we are a social species and our ancient tendencies translate to our modern web and digital preferences. A study that analyzed Facebook app downloading data shows that most apps are only downloaded by a small number of users, but there are some apps that catch the attention of the herd and are catapulted to super stardom. This phenomenon highlights our hardwired herding tendencies and also shows that most social and human events are not normally distributed. Most social interactions are characterized by extreme skewness and kurtosis…..and we are often left with one BIG winner and many losers.
Here is the link to the full article and some quoted text below: http://www.economist.com/node/21011810
As the pair report in the latest Proceedings of the National Academy of Sciences, they pored over (anonymous) data of the entire Facebook population in July and August 2007 (around 50m at the time), and at all but a few of the 2720 apps available for download in the same period. This amounted to a total of some 104m app installations. At that time, a Facebook user’s apps were all visible to friends, who were also notified when any new app was downloaded (a practice Facebook has since abandoned). This, along with a display of the total number of installations of each app, were the only ways apps were plugged, permitting the researchers to control for the effects of external advertising. Any effects observed would thus be wholly attributable to social influence, not canny ad men.
Dr Reed-Tsochas and Dr Onnela duly discovered that the social networkers’ herd mentality was intact, with popular apps doing best, and the trendiest reaching stratospheric levels. A typical app was installed around 1,000 times, but the highest-ranked notched up an astonishing 12m users. What did come as something of a surprise, though, was that our inner lemming only kicked in once the app had breached a clear threshold rate of about 55 installations a day. Any fewer than that and users seemed oblivious to their friends’ preferences. Interestingly, after some serious number crunching, the researchers found that this cannot be put down purely to the network effect, ie, the idea that adopting a certain innovation only makes sense if enough other people have done so. Indeed, this effect appeared less pronounced than might have been expected.
Moreover, the data suggest that the sudden spike in installations doesn’t come about simply because a discovered threshold has been passed. This means the observed threshold rate is unlike an infectious disease’s basic reproduction number. (This is what epidemiologists call the average number of secondary cases caused by a typical infected individual in a population lacking immunity, with no efforts to control the outbreak.) In other words, it would be inaccurate to speak of an epidemic of popularity. Rather, Dr Reed-Tsochas and Dr Onnela suggest that two discrete behavioural patterns emerged. Users appeared to treat any app with more than 55 daily installations differently to those with fewer downloads. Under 55 daily installations, friend behaviour was an instrumental part of the decision to install. Over 55 daily installations, and friend behaviour didn’t matter one jot. Virtual lemmings are, it seems, discriminating in ways we still don’t quite comprehend. As is, no doubt, the offline troop.
Rats trained to detect landmines.
April 5, 2010
These rats actually look pretty cute. 
The Big Mac index
March 17, 2010
This is a favorite of mine….the Economist
Our Big Mac index shows the Chinese yuan is still undervalued
Mar 17th 2010 | From The Economist online
RECENT renewed American calls for China to revalue its currency have so far fallen on deaf ears. China has rejected accusations that America’s huge trade deficit with it is caused largely by an artificially weak yuan, which has been pegged to the dollar since July 2008. Economists point out that a depreciation of the yen did little to help reduce America’s trade deficit with Japan in the 1980s. But the yuan is unquestionably undervalued. Our Big Mac index, based on the theory of purchasing-power parity, in which exchange rates should equalise the price of a basket of goods across countries, suggests that the yuan is 49% below its fair-value benchmark with the dollar.
