Predictability in an unpredictable artificial cultural market

TL;DR

This paper investigates how social influence in cultural markets can paradoxically enable early prediction of winners, despite initial unpredictability, by analyzing experimental data and deriving a practical early identification rule.

Contribution

It introduces a novel rule for early identification of winners in social-influenced markets and validates its effectiveness on independent data.

Findings

Early decisions can predict eventual winners with high success.

Social influence amplifies predictability despite initial unpredictability.

The derived rule performs well on unseen data.

Abstract

In social, economic and cultural situations in which the decisions of individuals are influenced directly by the decisions of others, there appears to be an inherently high level of ex ante unpredictability. In cultural markets such as films, songs and books, well-informed experts routinely make predictions which turn out to be incorrect. We examine the extent to which the existence of social influence may, somewhat paradoxically, increase the extent to which winners can be identified at a very early stage in the process. Once the process of choice has begun, only a very small number of decisions may be necessary to give a reasonable prospect of being able to identify the eventual winner. We illustrate this by an analysis of the music download experiments of Salganik et.al. (2006). We derive a rule for early identification of the eventual winner. Although not perfect, it gives considerable practical success. We validate the rule by applying it to similar data not used in the process of constructing the rule.