A Simple Note on Informational Cascades
AbstractSeminal models of herd behaviour and informational cascades point out existence of negative information externalities, and propose to ?destroy? information in order to achieve social improvements. Although in the last years many features of herd behaviour and informational cascades have been studied, this particular aspect has never been extensively analysed. In this article we try to fill this gap, investigating both theoretically and experimentally whether and to which extent destroying information can improve welfare. Our empirical results show that this decisional mechanism actually leads to a behaviour pattern more consistent with the theory that in turn produces the predicted efficiency gain. --
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Bibliographic InfoArticle provided by Kiel Institute for the World Economy in its journal Economics: The Open-Access, Open-Assessment E-Journal.
Volume (Year): 2 (2008)
Issue (Month): 1 ()
Informational cascades; information externality; individual decision making; experiment;
Other versions of this item:
- D62 - Microeconomics - - Welfare Economics - - - Externalities
- C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
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