Rumors, Standards, Scarce Knowledge

It’s amusing to notice that the model that power-law distributions are more likely to arise in emerging markets, ones where user’s are reduced to follow the leader behavior, is similar to Gossling’s phase model of standardization.

One of the roles of standards making is to provide the market with metrics they can use to measure product quality. That’s obviously the function of standards like weights and measures. I suspect that many buyers hold back from entering a market until they see the emergance of open standards. They then use that event as a signal that the market has matured sufficently that they can rest assured that the knowledge institutions have appeared. Such buyers are, presumably, not intending to reap the advantage of being an early adopter, i.e. the chance that by moving early they can trigger a transformation in their own upstream markets.

Meanwhile you can see other analogies in this story about how fast a rumor/panic spread in Hong Kong regarding SARS. Here the prankster managed to yell “fire” in the crowded theater by fradulently claiming to be a reputable local news paper. Individuals who heard the rumor all try to assess it’s quality. After a while they are reduced to looking around and noting that other people seem to be acting on the rumor. That’s all you need, ignorance and users who are ready to act. Ready to link into the graph. In this case the nodes in the graph are behaviors to take regarding SARS rather than vendors in a marketplace.

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