LESSON ELEVEN:Falling to Pieces

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Network Externalities: Bandwagon Effect and Snob Effect (with diagram)

ADVERTISEMENTS: Network externalities may be positive or negative. Network externalities are a special kind of externalities in which one individual's utility for a good depends on the number of other people who consume the commodity. In our analysis of demand we have assumed that demand for goods of different individuals are independent of one and ...

​HITCH UP YOUR WAGON: Read the article, Network Externalities: Bandwagon Effect and Snob Effect. Learn how the demand curve for a good will shift when demand creates more demand via the bandwagon effect. Don’t worry, there are pictures to help explain it. 

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GO TO DINNER: To make it a good one personally taste-test each of your options. No time? Check out ratings from places like Zagats or Yelp. Sure, you’ve engaged in group- think and followed the crowd, but that isn’t always a bad thing or a life and death decision. Unless, of course, you are looking for a raw bar or sushi. 

Yelp

People use Yelp to search for everything from the city's tastiest burger to the most renowned cardiologist. What will you uncover in your neighborhood?

MAKE IT DINNER AND A MOVIE: Rent or stream Agora (2009). How do you make a Hollywood film out of a chaste, neo-platonic philosopher? Insert a romantic interest of course! Slaves and governors fawn over Rachel Weisz but she proves elusive to the last. Alejandro Amenábar’s film was controversial for painting early Christians in a negative light, though frankly, the historical record already does much of the same. Tolerance is a tough sell during the stampede of the runaway bandwagon. 

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LOVE A LEMMING: Think the lemming, known for mindlessly following the herd during mass migrations including leap- ing over cliffs to its death, would be the best mascot for groupthink? Think again. Humans merely bought in to the story after a 1950s documentary set the stage; literally, as in they staged the whole thing. Instead of proving thatArctic rodents have a death wish, it proves we will believe anything if enough others do too.

See the original clip here:

Animal Planet debunks the myth here: ​

​The best animal mascot for the bandwagon effect still looks a lot like you and me.