A new study by researchers from the MIT Sloan School of Management, the Hebrew University of Jerusalem, and NYU Stern School of Business shows that many people like or give positive feedback just because others do. "This herding behavior happens systematically on positive signals of quality and ratings," says Sinan Aral, an associate professor at the MIT Sloan School of Management. While this phenomenon of social positivity sounds pleasant enough on the surface, there are pitfalls to it, such as the manipulation of online ratings by some political operatives, marketers, or anyone who stands to profit by creating an exaggerated appearance of popularity.
“Whereas negative social influence inspired users to correct manipulated ratings, positive social influence increased the likelihood of positive ratings by 32 percent and created accumulating positive herding that increased final ratings by 25 percent on average.”
The analysis reveals that the relative impact of this effect via Facebook is larger than observational learning, probably because people tend to trust their Facebook friends and are thus more likely to adopt the products endorsed by their friends.
In reality this is basic human behavior. We can look at the way the stock market works and find the group effect on a daily basis. On the one hand, group decision-making can lead to better decisions, but it can also lead to negative effects that have resulted in financial disasters.
In 1988 Jerry Harvey, a professor at George Washington University called it the “Abilene paradox.” Like all paradoxes, the Abilene paradox deals with absurdity. On the surface, it makes little sense for people, whether they are couples or friends, to take actions that are diametrically opposed to the way they rationally think.
The Abilene paradox is responsible for the herding effect on social networks. It makes people feel that, if one of their friends likes a particular product or service, it must be good. In essence, scientists confirm that the notion that a slight positive nudge can greatly impact the overall impact and influence of a link or comment.
Just look at the way Facebook advertises your friends’ likes so you check them and like those pages too. This creates a significant number of additional likes for pages that people don’t care about. They are just following their friends' recommendations. After a couple of levels of people liking a page because a friend of a friend did it in the first place, the fact that someone likes that page is completely meaningless.
Social networks are aware of this situation but prefer to ignore it, since its existence serves their interests. Companies such as Facebook, LinkedIn, and Instagram make billions on advertising to people who like pages, and the more likes a page or product has means incremental revenue.
The analysis reveals that the relative impact of this effect via Facebook is larger than observational learning, probably because people tend to trust their Facebook friends and thus are more likely to adopt the products endorsed by their friends. Smart CIOs will help their CMOs take advantage of this phenomenon, but they should also help CIOs correct for it when it comes to data analysis. Using social media as a focus group makes it easy to believe your own hype. Don't get caught in the trap social media hopes you fall into.