sportswear, casual clothing, and other products. Jean René Lacoste, the
company’s founder, was a widely admired tennis star in the 1920s and early
1930s. His nickname was “The Crocodile.” Initial contagion for the clothing
line, launched in 1933, benefited from his fame. Today, Lacoste the tennis star is
mostly forgotten. Still the memory continues, and the logo persists. Those who
do not reflect on the imperatives of marketing may imagine that people wear
logo-branded clothing because they want to associate themselves with a
prestigious clothing designer. But perhaps logo marketing works because it
increases contagion. Customers may absently reach for the logo product because
it is familiar and safe, and because so many others are wearing clothes with the
same logo.
The construction of narratives by news media, promoters, and marketers can
also help lower the forgetting rate. Narratives can be associated with symbols or
rituals that remind people of basic elements of the narrative. A symbol can be
incorporated into building architecture, letterheads, email messages, and a
million other items, and a narrative can be incorporated into regular rituals, such
as traditional parades on national holidays. Experts do not fully understand the
role of ritual and symbols in aiding memory, but they do understand that they are
associated with success.
All these examples illustrate a fundamental error that people tend to make:
phools think that the popularity of a story or of a brand is evidence of its quality
and deep importance, when in fact it rarely is. On the contrary, growing evidence
in recent years has shown that many consumers detest logos and aggressive
marketing.15 Narrative contagion is often the result of arbitrary details, such as
the frequency of meetings among people (many people see a logo on a shirt) and
natural links to other contagious narratives (Lacoste’s onetime fame as a tennis
player).

Beauty Contests and Tail Feathers: How the Theory of Mind
Feeds Economic Narratives
Psychologists have noted that the human species is unique in the advanced
development of its theory of mind—that is, humans’ strong tendency to form a
model in their own minds of the activities in others’ minds. We are thinking
about what others are thinking, about their individual thoughts. We observe their
actions, their facial expressions, and their vocal intonation, which we then relate
to their beliefs and intentions.
The contagion of specific narratives may be related to storytellers’
impressions regarding what other people will think. People like to hear stories
that they can retell to others who will like the same story, and so storytellers like
to tell such stories.
In 1936, Keynes introduced what we now call theory of mind into economic
theory with his “beauty contest” metaphor,16 which he put forth to explain
speculative markets, such as the stock market. Keynes thought that people
deciding which investments to make were basing their decisions on observations
of what other investors were thinking or what they were about to do with their
investments (which might cause future price changes). In the case of stock
market investments, investors look at what other people whom they randomly
encounter are saying and emoting, and they look at patterns in stock prices that
offer clues regarding what other people are doing or will soon be doing. They are
usually not looking at real evidence based on the firm’s technology or
management style.
Keynes said he had seen a newspaper contest that displayed a hundred photos,
each of a pretty face. But the women in the photos were not the contestants in
this unusual form of beauty contest; the readers of the newspaper were. They
were asked to mail to the newspaper their list of the six prettiest faces. The
person whose list most closely matched the most popular faces as revealed by all
the lists together would win the contest prize.17
Keynes pointed out that the optimal strategy is not to pick the six prettiest
faces based on one’s own opinion. Instead, it makes more sense to pick the six
that one thinks other people would find prettiest. But this strategy is not optimal
either, if we carry the model of mind to the next step in the chain. One should
pick the faces that one thinks that others think that others find the prettiest. So, in