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Positive Linking: How Networks Help Us Decide

Positive Linking: How Networks Help Us Decide by Sam McNerney

In On the Heavens, Aristotle imagined a man idling midway between food and water. He is equally hungry and thirsty, but without a good reason to pick one option over the other, he dies of hunger and thirst. It’s a thought experiment, still unresolved, that appears in the writings of Michele de Montaigne, Baruch Spinoza, and, most famously, the medieval philosopher Jean Buridan.

It remains unresolved because it raises a fundamental question about how people decide. If humans are rational and always opt for the best option, what happens if two options are equally good? In a world awash with choice—I’m thinking about the toothpaste aisle at my pharmacy—this arcane philosophical paradox feels contemporary. Even when we know what we need, simple decisions paralyze the mind.

I can’t tell you how to decide better. Maybe you should ask a friend to decide for you or avoid situations with choice overload. In his stunning profile of Barack Obama in Vanity Fair, Michael Lewis writes that the President only wears blue or gray suites. “I’m trying to pare down decisions,” Obama told Lewis. “I don’t want to make decisions about what I’m eating or wearing. Because I have too many other decisions to make.”

I can recommend one rule of thumb. It’s a deceptively simple and overlooked idea, one of many scattered throughout Paul Ormerod’s brilliant book Positive Linking: How Networks Can Revolutionize the World.

Ormerod mentions a paper, “On the Rate of Gain in Information,” written by William Hick and published in 1952. Hick devised a clever experiment involving semaphore lamps and corresponding Morse code keys. He discovered the time it took participants to choose the corresponding key after he lit a lamp increased exponentially as the amount of options increased. That is, if it takes ten seconds to select between two options, it won’t take one minute to select between ten options. It will take about three and a half minutes.

What happens when there are simply too many options? Google has brilliantly answered this question by relying on networks effects. Its algorithms don’t analyze the contents of each webpage. They list websites with the most inbound links, assuming, correctly, that people naturally link to the most useful and credible sources. The somewhat disturbing implication is not that the millions of people who also searched for “good Mexican food in Manhattan” helped me find what I am looking for. It’s that their searches and selections shape my preference.

See full article here by Sam McNerney

Positive Linking: How Networks Can Revolutionize the World – Description

Positive Linking: How Networks Can Revolutionize the World by Paul Ormerod

According to Paul Ormerod, author of the bestselling Butterfly Economics and Why Most Things Fail, the mechanistic viewpoint of conventional economics is drastically limited – because it cannot comprehend the vital nature of networks. As our societies become ever more dynamic and intertwined, network effects on every level are increasingly profound. ‘Nudge theory’ is popular, but only part of the answer. To grapple successfully with the current financial crisis, businesses and politicians need to grasp the perils and possibilities of Positive Linking.

Our social and economic worlds have been revolutionized by a massive increase in our awareness of the choices, decisions, behaviours and opinions of other people. For the first time in human history, more than half of us live in cities, and this combined with the Internet has transformed communications. Network effects – the fact that a person can and often does decide to change his or her behavior simply on the basis of copying what others do – pervade the modern world.

As Ormerod shows, network effects make conventional approaches to policy, whether in the public or corporate sectors, much more likely to fail. But they open up the possibility of truly ‘Positive Linking’ – of more subtle, effective and successful policies, ones which harness our knowledge of network effects and how they work in practice.

About the Author

Paul Ormerod is the author of The Death of Economics, Butterfly Economics and Why Most Things Fail. He studied economics at Cambridge and his career has spanned the academic and practical business worlds, including working at the Economist and as a director of the Henley Centre for Forecasting.

Positive Linking

Positive Linking: How Networks Can Revolutionize the World by Paul Ormerod