Crowds and networds

Tim Harford highlights the work of Mark Granovetter on networks and crowds.

: "Consider the following simple model of a potential riot, based on an idea published in 1978 by the sociologist Mark Granovetter. There are 1,000 people in a crowd of protesters, and all of them have some underlying tendency to embark on a looting spree. We might reckon that an outbreak of rioting might be triggered by insensitive policing, or by the poverty of the crowd, or the opportunities for theft or for violent protest. But for simplicity let’s assume that the only thing everyone in the crowd cares about is what everyone else in the crowd is doing. Some people will start looting without much company. Others will hang back until the riot is well under way."

This can also be used, I think, to look at the way that speculation can build.  Given the information cascade that builds when valuation is difficult and that activity of others can imply some understanding that may not exist.