The effect of social cues on marketing decisions

We address the question as to what extent individuals, when given information in marketing polls on the decisions made by the previous N r individuals questioned, are likely to change their original choices. The processes can be formulated in terms of a Cost function equivalent to a Hamiltonian, which depends on the original likelihood of an individual making a positive decision in the absence of social cues p 0 ; the strength of the social cue J ; and memory size N r . We find both positive and negative herding effects are significant. Specifically, if p 0 > 1 / 2 social cues enhance positive decisions, while for p 0 < 1 / 2 social cues reduce the likelihood of a positive decision.