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 p₀; the strength of the social cue J; and memory size N_r. We find both positive and negative herding effects are significant. Specifically, if p₀>1/2 social cues enhance positive decisions, while for p₀<1/2 social cues reduce the likelihood of a positive decision.