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To: lurqer who wrote (38842)	2/2/2001 12:30:29 PM
From: JAPG	Read Replies (1) \| Respond to of 54805

Lurqer, Of course it can be thought in terms of feedback, but we wouldn´t be inventing anything new. Brian Arthur (the attributed father of increasing returns) describes very well a positive feedback mechanism in chapter 5 of his book " Increasing returns and path dependence in the economy" Some excerpts from that chapter: When prospective buyers are making purchasing decisions among several available technically-based products, choosing among different computer workstations, say, they often augment whatever publicly available information they can find by asking previous purchasers about their experiences---which product they chose, and how it is working out for them. This is a natural and reasonable procedure; it adds information that is hard to come by otherwise. But it also introduces an "information feedback" into the process whereby products compete for market share. The products new purchasers learn about depend on which products the previous purchasers "polled" or sampled and decided to buy. They are therefore likely to learn more about commonly purchased product than one with few previous users. Hence, where buyers are risk-averse and tend to favor products they know more about, products that by chance win market share early on gain an information-feedback advantage. Under certain conditions a product may come to dominate by this advantage alone. This type of network phenomena is usually referred to as " Information Contagion" in the Increasing returns studies. Take care JAPG