Informational cascades in the laboratory: Do they occur for the right reasons?
AbstractRecently, the theory of informational cascades has been tested in an experiment by Anderson and Holt (1997) who report that their data support the theory amazingly well. In this note we report on an experiment designed to find out whether observed cascades are indeed due to rational Bayesian updating. However, we find little support for rational updating. The simple heuristic "follow your own signal" does much better in explaining our data than Bayesian rationality.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Economic Psychology.
Volume (Year): 21 (2000)
Issue (Month): 6 (December)
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Web page: http://www.elsevier.com/locate/joep
Other versions of this item:
- Steffen Huck & Joerg Oechssler, 1999. "Informational cascades in the laboratory: Do they occur for the right reasons?," Experimental 9901001, EconWPA.
- C9 - Mathematical and Quantitative Methods - - Design of Experiments
- D8 - Microeconomics - - Information, Knowledge, and Uncertainty
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Anderson, Lisa R & Holt, Charles A, 1997. "Information Cascades in the Laboratory," American Economic Review, American Economic Association, vol. 87(5), pages 847-62, December.
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- Selten, R. & Abbink, K. & Buchta, J. & Sadrieh, A., 2002. "How to Play 3x3 Games: A Strategy Method Experiment," Discussion Paper 2002-39, Tilburg University, Center for Economic Research.
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- Samuelson, William & Zeckhauser, Richard, 1988. " Status Quo Bias in Decision Making," Journal of Risk and Uncertainty, Springer, vol. 1(1), pages 7-59, March.
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