[MUSIC] Now there are many scenarios in which empirical expectations do matter to ones choice. One typical example is imitation. When I imitate someone, I have certain expectation about their behavior. Think of Sex and the City. The actresses in Sex in the City were very well dressed, very nice dressed, and had very nice shoes. And what happened is lot of women started buying the same shoes. They wanted to imitate those actors. They like them, they wanted to feel cool, they wanted to feel good. And very often when we imitate, this is one of the motives we have. The picture is, a picture of teenage girls. And, what these girls want, is to imitate other girls who are hot, successful, popular, attractive, and whatnot. Fashion is a case of imitation. And, typically, you follow fashion because you want to be fashionable. What does it mean? You want to be excepted in a certain group, you want to be liked, you want to look like somebody you like, and so on and so forth. Your expectation about these fashionable people are what drive your choice to buy, a certain type of clothes or shoes or whatever. Now, a very common saying is dress for success. And it's very interesting because people want to imitate successful people. That's natural, is adapting, if you will. But, the problem is, you don't know why these people are successful. And so you look at some external features and, suppose they dress in a particular way, and then, probably, they will be imitated. And this may be a big mistake because, obviously, success doesn't depend on the dress. But, people want to copy successful people, and they zero in features that are easily ascertainable. And this is another case of empirical expectation. We also very often in very ambiguous and clear situation, we don´t know much, we look at what other people do. This is called social proof. I'll give you an example. When I had to buy a new refrigerator, I had no idea of which model was a good one. They all looked good to me. So, what people do, normally, go to Yahoo, to Amazon and look at reports of customers. And the more people say, Viking is fantastic, the more people will feel safer in buying a Viking everyday. So this is an example of social proof. We know that consumer based the decision on what they observe other people doing. And why do we do that? Well, again as I said, because if I look at the Amazon reports and I see that there are 100 reports of a Viking being a great refrigerator, I think they know what they are doing. They bought it. And so I Imitate them. Now we know there are many businesses that have been very successful just using social proof. Think of Yelp, Angie's List. You go there and there you look for, who knows, a contractor. And basically you don't know, you're very uncertain. You know you don't have friends that can tell you where to go, what to do. And what do you is just go to Angie's List, look at the list and basically the grades that people give to contractors and sort of feel reassured. You want to be right in your choice. The third case is a case that I just discussed. We want to coordinate with other people and when we want to coordinate, empirical expectations matter. We will talk more about coordination in the next lecture.