Told that the line outside one restaurant was rather long while there was no wait for a similar place nearby, most of us choose the one with the crowd.
Where are we going? To the economics of crowds.
Why We Need Crowds
For fake reporters, protestors or just to make a room overflow with supporters, there are firms that can solve your problem. Like a financial intermediary matches savers and borrows, crowd creating businesses connect unemployed actors or Homer Simpson (below) to people who need people.
Working for a crowd hiring firm, Homer Simpson got $50:
Political Crowd Hiring
When Donald Trump announced his presidential aspirations, Extra Mile Casting provided some enthusiasm. According to The Hollywood Reporter, their e-mail said, “We are looking to cast people for the event to wear t-shirts and carry signs and help cheer him in support of his announcement.” The pay was $50.
Meanwhile on the Democratic side, when Anthony Weiner ran for mayor in NYC (2013), people from Crowds on Demand got $15 an hour to guarantee some excitement at his events.
Our Bottom Line: Behavioral Economics
In “A Note on Restaurant Pricing,” referring to restaurants with long lines, Dr. Becker wonders why they don’t raise their prices to boost profits and diminish the lines. The reason, he concludes, is that demand begets demand.
Or, as he explains…
“Suppose that the pleasure from a good is greater when many people want to consume it, perhaps because a person does not wish to be out of step with what is popular or because confidence in the quality of the food, writing or performance is greater when a restaurant, book or theater is more popular.”
So, observing a crowded restaurant or a political rally, just think about demand curves.
My Sources: After hearing just a sentence or two from an NPR “All Things Considered” report on crowd hiring, I discovered an Atlantic Magazine article and the Trump story in The Hollywood Reporter. Reminded of the Gary Becker essay, “A Note on Restaurant Pricing,” I reread the paper and saw that the connection between the demand curve and the crowd was central to his analysis. But finally, steering away from academia, this California Sunday Magazine article is the perfect description of what it’s like to be employed by a crowd hiring firm.