Herd Behavior, the 'Penguin Effect,' and the Suppression of Informational Diffusion: An Analysis of Informational Externalities and Payoff Interdependency
Abstract
This article analyzes a technology adoption process in which the effect of informational spillover interacts with network externalities. The interplay of informational externalities and payoff interdependency induces risk-averse and clustering behavior in the technology-adoption process. The analysis differs from the herd behavior literature in focusing on how the herd behavior of subsequent users influences the initial adoption decision. Moreover, herd behavior in this article stems from each agent's desire to inhibit the revelation of new information that can be used in a way detrimental to her, rather than from each agent's effort to free-ride on information contained in the decisions made by predecessors.Download Info
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Bibliographic Info
Article provided by The RAND Corporation in its journal RAND Journal of Economics.
Volume (Year): 28 (1997)
Issue (Month): 3 (Autumn)
Pages: 407-425
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Related research
Keywords:Other versions of this item:
- Choi, J.P., 1994. "Herd behavior, the "Penguin effect", and the suppression of informational diffusion: An analysis of informational externalities and payoff interdependency," Discussion Paper 1994-62, Tilburg University, Center for Economic Research.
References
References listed on IDEASPlease 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.:
- Scharfstein, David. & Stein, Jeremy C., 1988.
"Herd behavior and investment,"
Working papers
WP 2062-88., Massachusetts Institute of Technology (MIT), Sloan School of Management.
- Scharfstein, David S & Stein, Jeremy C, 1990. "Herd Behavior and Investment," American Economic Review, American Economic Association, vol. 80(3), pages 465-79, June.
- Grossman, Sanford J & Kihlstrom, Richard E & Mirman, Leonard J, 1977. "A Bayesian Approach to the Production of Information and Learning by Doing," Review of Economic Studies, Wiley Blackwell, vol. 44(3), pages 533-47, October.
- Katz, Michael L & Shapiro, Carl, 1986. "Technology Adoption in the Presence of Network Externalities," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 822-41, August.
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