Umair Haque / Bubblegeneration
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Design principles for 21st century companies, markets, and economies. Foreword by Gary Hamel. Coming January 4th. Pre-order at Amazon.

Wednesday, September 22, 2004

The Problems with Blogs, Pt 2

One of the classic experiments in behavioural economics showed that bubbles happen because of myopic (short-term) expectations. At worst, information cascades and mirages (where you ignore your own information and act on what you think your neighbour believes) take over and cause market failures (ie, Black Monday).

Now, and this is the interesting bit, blogs are not exactly 'fact checking your ass' - in fact, they're creating more and more myopic incentives and expectations. Bloggers are in a race to see who can catch what the fastest.

This is interesting to me because there's such a strong parallel with markets. Markets tell the truth - but only in the long term. I think blogs will too. But if that's the case, where is their comparative advantage over traditional media? I think it's in the transparency - not the truth-telling.

Which changes the value drivers, future market structure, etc. More on that later.

-- umair // 11:30 AM // 0 comments


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