Wednesday, November 22, 2006

Media-Consumer Feedback Loops

The front of today's FT has a headline on the housing bust due (paid subscription needed for full thing). In the article, a time certainly isn't given, but one has to ask - does bringing up the point in the media make the occurrence more likely? In other words, so long as people aren't told about bad things, optimism is at a high, and markets are high as a result.

The media is interesting from a merely reporting point of view. However, it gets hyper-interesting when it reports on the people reading it, setting up some feedback loops that, if they can be controlled, can probably be very useful... (But to whom? ;)

Thus, the fear or optimism encouraged by the reporting of the bust or boom, respectively, of house prices, is perhaps akin to the fear or optimism reported by media regarding, say, terrorism. Media reports, people react, politicians react, media reports.

But then, is there a better way to run things? Or, ironically, is merely being aware of this line good enough to break it?

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