Many markets have characteristics different to those of the “standard” products. By which I mean the apples and oranges one learns about in introductory economics. One of the more interesting facets of the information economy is that some markets can tip. This means success leads to future success. Winners get more. This can create the aura of inevitability.
Market Tipping: Not The Same As Tipping Your Waiter
Market tipping happens particularly when a standard is likely to be set. Who wants to be left with a technology that doesn’t catch on? It is typically much better to buy a technology that others are investing in. After all, the winning product will attract support and complementary products. No one wants to have a phone on a unique platform for which no one is bothering to create apps.
Interestingly it is not necessary for any platform/technology to be more popular to tip. To be perceived as going to be more popular is sufficient. Thus,
…the aura of inevitability is a powerful weapon….
Shapiro and Varian, 1999, page 181
You wonder how much Apple benefits from this. Sometimes people assume Apple will win at whatever it does and just get out of the way.
The Aura Of Inevitability In Politics
The aura of inevitability ties into politics. Politicians often use inevitability as their strategy. This is especially true in political primaries. Hillary Clinton seemed to have adopted such a strategy in 2008. The logic of such an approach is clear when the aura is used to persuade political insiders. Those working in politics want to give early support to the eventual winner/president. Perhaps they will even get jobs working for the winner. They certainly look more ‘in the know”.
A problem with the strategy for Hillary Clinton in 2008 was that things are less clear when it comes to ordinary voters. We all probably gain some psychological benefits from early support of a winner. That said, these psychological benefits seem a lot smaller than the tangible gains political insiders might get for their early support of the winning candidate. If I, as an outsider, pick the winning candidate I feel good. If a local organizer picks the winner they can gain a powerful friend. This suggests that the aura of inevitability argument works best for super delegates and endorsers in primaries.
It will be less effective with ordinary voters. Endorsements might tip when they reach a certain level. Yet, the votes of the average person won’t necessarily tip. There is something appealing to the public about failure when it maintains purity. (I don’t get these people but many seem to like being uncompromising losers. They can even claim to have “won the argument”).
The Information Economy And Politics
Shapiro and Varian’s had some great ideas about the information economy. Which apply to politics?
For more on political marketing see here, here, and here.
Read: Carl Shapiro and Hal R. Varian (1999) Information Rules, Harvard Business School Press.