Strategic Delay and the Onset of Investment Cascades
AbstractI study the phenomenon of herd behavior in a framework where agents can endogenously choose both the actions and the timing of their actions. I assume that agents may have privately known quality and content of information. A unique symmetric equilibrium in pure strategies is proved to exist and characterized in its closed form. An investment cascade always occurs in the equilibrium, and a strategic delay is shown to exist before the sudden onset of the investment cascade. I also examine the loss of welfare from delay and information cascade
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Bibliographic InfoArticle provided by The RAND Corporation in its journal RAND Journal of Economics.
Volume (Year): 28 (1997)
Issue (Month): 1 (Spring)
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