As our world becomes increasingly interconnected, as communication gets easier, faster, and more pervasive, as people spend more of their time in urban and media-saturated environments, the network effects in our society and economy become increasingly pronounced. What economists call network effects are related more generally to trends or fads–any phenomenon where an individual’s behavior is influenced by the behavior of those around him or her. In complex environments, we often lack the experience or expertise to judge the quality of goods or services, so we fall back on more simple heuristics, or rules of thumb, to assess quality. This can mean seeing a movie because our friends have seen it, listening to a new band based on blog buzz, or buying a book because of its popularity on the bestseller lists. These strategies are shortcuts to help us separate the wheat from the chaff, and while they tend to be quick, easy, and efficient, they are not always accurate, and are subject to various types of distortions. Recognizing this fact, two authors conspired to artificially elevate their ranking on the New York Times bestseller list as a means of inducing new purchases based on the bestseller ranking alone.

In 1995, management gurus Michael Treacy and Fred Wiersema secretly purchased 50,000 copies of their business strategy book The Discipline of Market Leaders from stores across the nation. The stores they purchased from just happened to be the ones whose sales are monitored to select books for the New York Times bestseller list. Despite mediocre reviews, their book made the bestseller list. Subsequently, the book sold well enough to continue as a bestseller without further demand intervention by the authors. Presumably, being on a bestseller list helps a book sell more because consumers and reviewers learn from the actions of previous buyers.

In a networked society, there can be an element of self-fulfilling prophecy to proclamations of success: seeming successful can actually ensure success.

The above quote is taken from a paper by Sushil Bikhchandani, David Hirshleifer, and Ivo Welch: Learning from the Behavior of Others: Conformity, Fads, and Informational Cascades