Monday, January 29, 2007

Incestuous Amplification

Incestuous Amplification, Groupthink, or Group Polarization is when a group of people begin to think alike after listening to each other for long enough (from wikipedia):
"Study of this effect has shown that after participating in a discussion group, members tend to advocate more extreme positions and call for riskier courses of action than individuals who did not participate in any such discussion. This phenomenon was originally coined risky shift but was found to apply to more than risk, so the replacement term choice shift has been suggested.

In addition, attitudes such as racial and sexual prejudice tend to be reduced (for already low-prejudice individuals) and inflated (for already high-prejudice individuals)
after group discussion.
Group polarization has been used to explain the decision-making of a jury, particularly when considering punitive damages in a civil trial. Studies have shown that after deliberating together, mock jury members often decided on punitive damage awards that were larger or smaller than the amount any individual juror had favored prior to deliberation. The studies indicated that when the jurors favored a relatively low award, discussion would lead to an even more lenient result, while if the jury was inclined to impose a stiff penalty, discussion would make it even harsher."

Specifically referring to online groups (from wikipedia):
"Group polarization has also been found to occur with online (computer-mediated) discussions e.g. (Sia et al., 2002). In particular, research has found that group discussions conducted when discussants are in a distributed (cannot see one another) or anonymous (cannot identify one another) environment, can lead to even higher levels of group polarization compared to traditional meetings. This is attributed to the greater numbers of novel arguments generated (due to PAT) and higher incidence of one-upmanship behaviors (due to social comparison)."

So the question today is: Are we, in the bubble following blog community, prone to this? Are we immune? Why? What weaknesses in our thinking should we be aware of because of these social tendencies?


Uncertain Buyer said...

A lot of Blogs are focusing on their topic alone. So it is prudent for someone to look at all the information, from all sources to come to a conclusion.

There is a lot of "noise" out there and you need to be good at filtering it.

It looks like the US Housing Market is being reported dire by Bloggers, Economists and the Media alike so the message is coming through. With a little noise from the RE Industry still trying to promote.

The Canadian RE Market is still a little noisy, so the message is hard to hear right now.

After 2007 the message will be heard above the noise in Canada and one should be able to make a good conclusion.

mohican said...

I try to just stay focused on the data to draw my conclusions. I think this groupthink problem arises when we all just pat each other on the back and don't critically look at the ideas we are discussing.

betamax said...

Yep, you always have to critique the beliefs you hold most dearly.

Beliefs are self-perpetuating: we notice and remember that which supports our beliefs, and we tend not to notice nor remember everything which refutes our beliefs.

Logic can tell us when something is unsustainable (i.e. trees can't grow to the sky), but empirical evidence is required to demonstrate that the subsequently predicted change is finally taking place.

freako said...

I don't think it was a random sample to begin with. As case in point, most of those who are bearish are still bearish. The few bullish posters are still bullish. If there was major group think going on, one would expect de-polarization.

Of course, there could always be the opposite, each point of view polarizes more. I think it is more likely that consensus building occurs, but I see that more as a result of good arguments being accepted and bad ones thrown out (because they don't stand up to critical scrutiny). I presume that there is confidence in numbers, so some who are not sure what to think may join local consensus uncritically. But who is to say whether that is groupthink or not.

Anonymous said...

I en

Anonymous said...

I enjoy reading these blogs and appreciate the data / opinions presented.

Unless interest rates go up in a big way, I don't see "the sky falling" as so many bears predict. Yes house values are very high, BUT we live in an extremely desireable city / province. The world as a whole is more aware of Vancouver as a desirable place to live / invest.

Mark this prediction though... in 10 years values will be EVEN higher than they are today. (Unless we get into double digit interest rates of course)

I hope the bears don't get left behind with their hopes and dreams of pre-2002 prices coming back. It won't happen. Some adjustments probably will happen. Real estate as with many industries, is cyclical. I just don't see bargain basement values many bloggers are sacrificing small animals to the real estate gods for.

Take care and peace out.