This paper aims in investigating the recursive effects of economic theories on the behaviour of bounded rational individuals and tests in the context of informational cascades the absorbability of theories of rational choice among bounded rational decision-makers. A theory is said to be absorbable whenever its logical and prescriptive content is accepted by individuals that choose to act according to it. This accounts for strategic equilibria and can be related to the logic underlying convergence of behaviour and intentional herding in sequential games. This paper discusses the causal role of theories on bounded rational decision-making and analyses in an experimental setting whether providing individuals with theoretical information on informational cascades affects overall probability of herding phenomena to occur as well as whether an incorrect cascade can be reversed. Findings confirm that revealing the theoretical principle of Bayesian optimization improves the degree of social efficiency, enlarges average earnings as well as the percentage of winning per position in the queue.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 38 (2009) Issue (Month): 5 (October) Pages: 728-738 Download reference. The following formats are available: HTML
(with abstract),
plain text
(with abstract),
BibTeX,
RIS (EndNote, RefMan, ProCite),
ReDIF
Did you know? All full texts are decentralized with the publishers, none reside on this server, thus making it possible to offer this service for free to all parties.