Introduction

As the global society is increasingly visualised as a network of connections between people, it is important to analyse the effects of this network on an individual, i.e., how people in a network influence each other’s behaviour and decisions. Social Influence theory (“Social Influence: Conformity, Social Roles, and Obedience,” n.d.) can be used to analyse these network effects on people. According to this theory, persuasion lies can be mild (conformity) or strong (obedience). This article addresses network effects of social influence under the lens of social conformity.

Conformity is the covert process by which an individual voluntarily or involuntarily changes his/her belief or behavior in order to fit in with a group (McLeod, n.d.). An example of social conformity would be a scenario where you do your research and determine that restaurant A is the best in the vicinity, so you intend to go there. However, on arrival, if you notice that the neighbor, restaurant B, is packed with people while restaurant A lays barren, you may tend to join the crowd at restaurant B despite the fact that your private information indicates that restaurant A is the better option. This example shows very clearly the psychological driver of herding that humans possess. To analyse these conformity effects further, the construct of information cascade is used, from which some interesting properties can be derived under the lens of social psychology.

Information Cascades

An information cascade is a situation when an individual, having observed the actions and possibly payoffs of those ahead of them, takes the same action regardless of the private information that they possess (“Information Cascades and Observational Learning,” n.d.). The key element of an information cascade is sequential decision making. When people make decisions sequentially, later people who observe these decisions infer something about what the earlier people know. In the example of the restaurant, the person possessed private information with the aim of going to restaurant A, however, on seeing more people in restaurant B and none in A, the diners already in B conveyed information about what they knew. A cascade is formed when people abandon their private information in favour of inferences based on earlier people’s actions (David and Jon 2010).

Humans are known to have a deeply rooted predisposition to imitate which comes from an evolutionary instinct of survival (in numbers) (Bikhchandani, Hirshleifer, and Welch 1998). However, it is important to note that this isn’t just a mindless and irrational imitation. Information cascades can be the result of drawing rational inferences from limited information. Taking recourse to the restaurant example, as the number of people in restaurant B increases, higher is the tendency to conform. The rationale behind this is that the latter people tend to think that the people in restaurant B know something that they don’t. Such an imitation may also occur due to the social pressure to conform, without any informational cause as well. It’s difficult to tell the two apart.

Broadly, there are two different sets of rational reasons for information cascading to occur.

  • Informational effects : As discussed in the restaurant example, these are the cascade effects that occur when the actions of others affect a person by changing his/her private information cues due to the notion that the group may know something that he/she doesn’t in a similar situation.

  • Direct-Benefit effects : The rationale involved here is that one may tend to copy others if there is a direct benefit to that person by aligning with the common behaviour. Here, the notion of private information may be absent or replaced altogether by the cascade effect.

It is important to note that the above two can work independently, hand-in-hand or even conflicting with each other. For example, in a scenario where a new technology has been released, information from the cascade (others possessing the technology) as well as an evaluation of our direct benefit in adopting this technology come into play. However, in the restaurant example, suppose there is a long line outside restaurant B, and we still choose to stand in the line rather than follow the private information cues about restaurant A, we are favouring the informational effects of the cascade over the inconvenience caused by waiting (“Information Cascades and Observational Learning,” n.d.).

A lot of experiments(mathematical and observational) have been done to understand the effects and implications of information cascades. A few of the implications are (“Information Cascades,” n.d.; David and Jon 1) :

  • Cascades can be wrong : When there is a situation where accepting a notion is in fact a bad idea that can reduce one’s utility, even if only the first two people accept this, a cascade of acceptances will start to propagate. This can be confirmed by Solomon Asch’s conformity experiments (Cherry, n.d.)!

  • Cascades can be based on very little information : People ignore their private information once a cascade starts and larger the cascade, greater the lure. A cascade can be started by just two people! This implies that if a cascade starts in a large population, most of the private information available to the people is not being used.

  • Cascades are fragile : Since large cascades can develop just by very little information, it also makes them easy to stop. Thus, people in such cascades can be made to alter their decisions in the presence of slightly superior information, thus overturning even long-lasting cascades.

An interesting point to note is that according to James Surowiecki’s The Wisdom of Crowds (Surowiecki 2005), aggregate behaviour of many people who individually possess limited information can produce accurate results provided each individual takes an independent decision. However, a group of people making a decision sequentially is highly prone to cascading, which as we have seen, can lead to incorrect outcomes.

This process of social learning (Bikhchandani, Hirshleifer, and Welch 1) has been long observed in society. As the philosopher Eric Hoffer asserts:

“When people are free to do as they please, they usually imitate each other.… A society which gives unlimited freedom to the individual, more often than not attains a disconcerting sameness. “

Case Studies of Information Cascades

Information cascades have an effect in various social realms such as market theory, politics, crime and enforcement, etc (“Information Cascades,” n.d.; Bikhchandani, Hirshleifer, and Welch 1998). In this section, two such case studies shall be analysed:

Marketing Strategies

Marketers are known to use the idea of information cascades to enable a buying cascade to develop for a new product. The idea here is to induce an initial set of people to adopt the new product, then those who make purchasing decisions later on may also adopt the new product even if it is no better, or even worse than competing products all thanks to the cascade effect. This process is most effective when later customers are able to observe just the decision to adopt the product rather than their review of the same. This is consistent with the idea that cascades arise naturally when people can see what others do but not gain access to the private information that they hold.

This phenomenon was strongly leveraged by groups such as Sahara in their chit fund scheme (“Sahara Scam: The Story of Trust and Betrayal,” n.d.). At first, a small pool of people invested in the chit fund and even got the promised returns. This set off an information cascade based on the foundations of trust seen only by this small pool of people. The speed at which the number of people investing into the chit fund was very high and all of it was based on very little information on the returns to the investment as experienced only by the initial small group of investors. The important feature here is that the Sahara Group gained a lot of trust merely by the power of numbers it attracted in the form of small investors. The information cascade kept rolling until public information broke the trust. After it was revealed to the general public that the chit fund was a money laundering scam, the cascade could no longer persist and the trust that people had broke down along with it.

Conspiracy Theories on Social Media

Social media and the tremendous capacity it has for the flow of information amongst people has made it a very fertile source for the growth of information cascades. At present, it has become increasingly and speedily possible to mobilise people towards a certain cause on social media (Lewis, n.d.) (Twitter and trending hashtags, for example). This inherent property of social media is taken advantage of to propagate material such as conspiracy theories. One such conspiracy theory is QAnon (Wong, n.d.). This theory started off as a series of anonymous posts in the microblogging platform 4chan. At present, the QAnon community is vast and is not only limited to the online world, but has also permeated into the physical, political realm as well. So, how did this happen? This can be explained by the theory of information cascades. At first, the traction for the theory was slow and small in number, but with time and the spread of information through the growing network, the number of believers in the theory soared rapidly, especially in 2020. Donald Trump, a powerful beacon of influence, was central to the theory, and could have de-legitimized it by shunning it, as we have seen how information cascades can be fragile. However, he never backed away from the theory, which further led to the believers of QAnon to internalise their beliefs.

Here, we can see many properties of information cascades as mentioned in the previous section. As the number of people invested in the theory grew, the more force of validation it received thus making newer audiences to believe in it. This was also possible because of the echo chamber effect of social media. People who identify themselves as ‘right wing’ were prone to getting dragged into the rabbit hole of this conspiracy theory. We also see how this cascade was formed out of little to no information as well. Just the sheer size of the cascade was enough for it to gain legitimacy.

Conclusion

In this article, we have seen the inevitability of social conformity in the form of information cascades due to the innate psychological driver of herding that we possess. These properties are leveraged well by corporates and people as well which, as we have seen, can lead to devastating consequences. Using our own private information to come up with an independent decision without getting influenced by cascade effects can lead to people making better choices. This is possible only by being aware of the effects of information cascades especially in a digitally connected world where the flow of information is immense.

References

Bikhchandani, Sushil, David Hirshleifer, and Ivo Welch. 1998. “Learning from the Behavior of Others: Conformity, Fads, and Informational Cascades.” The Journal of Economic Perspectives 12 (3): 151–70. http://www.jstor.org/stable/2647037.

Cherry, Kendra. n.d. “The Asch Conformity Experiments.” https://www.verywellmind.com/the-asch-conformity-experiments-2794996.

David, Easley, and Kleinberg Jon. 2010. Networks, Crowds, and Markets: Reasoning About a Highly Connected World. USA: Cambridge University Press.

“Information Cascades.” n.d. https://psychology.wikia.org/wiki/Information_cascades#.

“Information Cascades and Observational Learning.” n.d. https://sites.uci.edu/dhirshle/files/2011/02/information-cascades-and-observational-learning.pdf.

Lewis, Tanya. n.d. “How Social Media Mobilizes Society.” https://www.livescience.com/28341-social-media-helps-mobilize-society.html.

McLeod, Sam. n.d. “What Is Conformity?” https://www.simplypsychology.org/conformity.html.

“Sahara Scam: The Story of Trust and Betrayal.” n.d. https://blog.finology.in/stock-market/sahara-scam-story-of-trust-and-betrayal.

“Social Influence: Conformity, Social Roles, and Obedience.” n.d. https://us.sagepub.com/sites/default/files/07_heinzen_social_influence_0.pdf.

Surowiecki, James. 2005. The Wisdom of Crowds. Anchor.

Wong, Julia Carrie. n.d. “QAnon Explained: The Antisemitic Conspiracy Theory Gaining Traction Around the World.” https://www.theguardian.com/us-news/2020/aug/25/qanon-conspiracy-theory-explained-trump-what-is.