Two Experiments to Test a Model of Herd Behaviour
AbstractWe carry out two experiments to test a model of herd behaviour based on the work of Banerjee (Quarterly Journal of Economics, CVII, 797â€“817, 1992). He shows that herding occurs as a result of people observing the actions of others and using this information in their own decision rule. In our experiments herding does not occur as frequently as Banerjee predicts. Contrary to his results, the subjects' behaviour appears to depend on the probabilities of receiving a signal and of this signal being correct. Furthermore, Banerjee finds that the pattern of decision making over a number of rounds of the game is volatile whereas we find that decision making is volatile within rounds. Copyright Kluwer Academic Publishers 2000
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Bibliographic InfoArticle provided by Springer in its journal Experimental Economics.
Volume (Year): 3 (2000)
Issue (Month): 2 (October)
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Web page: http://www.springerlink.com/link.asp?id=102888
herd behaviour; experiments; decision making;
Other versions of this item:
- Allsopp, L. & Hey, J.D., 1998. "Two Experiments to Test a Model of Herd Behaviour," Discussion Papers 98-28, Department of Economics, University of Birmingham.
- John Hey & Louise Allsopp, . "Two Experiments to Test a Model of Herd Behaviour," Discussion Papers 99/24, Department of Economics, University of York.
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
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- Sushil Bikhchandani & David Hirshleifer & Ivo Welch, 2010.
"A theory of Fads, Fashion, Custom and cultural change as informational Cascades,"
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1193, David K. Levine.
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- Shiller, 021Robert J. & Pound, John, 1989. "Survey evidence on diffusion of interest and information among investors," Journal of Economic Behavior & Organization, Elsevier, vol. 12(1), pages 47-66, August.
- 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.
- Devenow, Andrea & Welch, Ivo, 1996. "Rational herding in financial economics," European Economic Review, Elsevier, vol. 40(3-5), pages 603-615, April.
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