http://econophysics.blogspot.com/2008/01/google-vs-new-hampshire-prediction.html 

In an ideal world, the political process would be governed by the rational decision making capacity of individuals, and external influences or forces would prove to be minimal.  Unfortunately, such a scenario is rarely a reality, as too often media outlets and other such forums act to impact the outlooks of issues, and in particular political ones, such that the a person amongst the unsuspecting public may be led to a premature or uninformed estimation of a situation.  An example of this type of media overstimulation was evident in the New Hampshire primaries, earlier this year.  As pundits across the political spectrum touted Barack Obama’s likelihood of having a landslide victory, these same pundits were shocked at the reality of Hillary Clinton’s success.  Across the board, people, pundits and the public alike, were asking how the predictions could have been so wrong.

At the heart of this issue is the theme of information cascades.  According to this model, the public assumes the pundits and experts contain some external knowledge, and if they all purport the same thing, individuals in the public would be more likely to follow in suit.  The Econophysics Blog (linked) juxtaposes this scheme with prediction markets employed by Google to estimate the success of new ventures.  While these prediction markets also operate on the principle of information cascade – that individuals tend to behave in correspondence to the trends exhibited by their peers – the Blog also notes a new phenomena at play known as “microgeography.”  Microgeography, they state, is the notion that information cascades tend to occur amongst people in some sort of proximity and not necessarily between friends.  One could suppose this is likely, since for the most part one may generalize that friend would already hold many of the same ideologies and similar information.  Thus, the take home message is that predictions resulting from information cascades are suspect if all the “experts,” or “first persons” in the cascade operate within the same framework – they are close to each other.  The Blog makes an astute call to these political pundits to step out of their known spheres and to explore new arenas in order to arrive at new perspectives, gain new information, and hopefully, engender more balanced information cascades.