The Hindu Business Line : <I>Lessons from swarm intelligence</I>

Consider this. A stock brokerage firm my friend does his business with has hit on a novel idea to increase its revenue. The firm displays everyday the top three stocks bought by its clients during the first two hours of trading. It has increased revenue by 15 per cent in one month. Why? The answer lies in "swarm intelligence". What is it?

Swarm intelligence studies the `intelligent' patterns that emerge from the collective behaviour of agents in an environment. Take ants. Each ant colony sends forager ants to hunt for food. When foragers find food, they drop a trail of scent for other ants to smell. Soon, all ants are on their way to get food. This is an example of swarm intelligence. It is the coordination among agents without evident communication.

How does swarm intelligence explain the increase in brokerage revenue? The firm tempted other clients to place orders by displaying the top three stocks that the active clients picked. It worked! When clients saw the top three stocks on the bulletin board, nearly 40 per cent placed orders for at least one stock.

EASY decisions

Our decision-making is always easy when we follow the crowd. The firm was simply exploiting this decision-making habit by telling the clients what others had bought. Amazon.com and other online retailers use similar strategies to attract consumers.

If you visit Amazon.com, you will be provided a list of books that are popular among other buyers. You will more likely choose from the list. The reason is because you think consensus opinion cannot be wrong. In fact, swarm intelligence studies have become so popular that scientists are now applying the findings to improve sales at large department stores!

(The author is based in Surrey, BC, Canada.)

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