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A simple note on Herd Behaviour

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Author Info
Andrea Morone () (University of Bari.)
Eleni Samanidou () (University of Kiel)

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Abstract

In his "Simple model of herd behaviour", Banerjee (1992) shows that - in a sequential game - if the first two players have chosen the same action, player 3 and all subsequent players will ignore his/her own information and start a herd, an irreversible one. In this paper we analyse the role played by the tie-breaking assumptions in reaching the equilibrium. We showed that: players' strategies are parameter dependent; an incorrect herd could be reversed; a correct herd is irreversible.

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File URL: http://www.dse.uniba.it/Quaderni/SERIES/WP_0013.pdf
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Publisher Info
Paper provided by Dipartimento di Scienze Economiche - Università di Bari in its series series with number 0013.

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Length: 9
Date of creation: Jan 2007
Date of revision: Jan 2007
Handle: RePEc:bai:series:wp0013

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Related research
Keywords: Herd behaviour; Run.;

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Find related papers by JEL classification:
D8 - Microeconomics - - Information, Knowledge, and Uncertainty

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References listed on IDEAS
Please 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.:
  1. Andrea Morone, 2008. "Financial markets in the laboratory: an experimental analysis of some stylized facts," Quantitative Finance, Taylor and Francis Journals, vol. 8(5), pages 513-532. [Downloadable!] (restricted)
    Other versions:
  2. Bikhchandani, Sushil & Hirshleifer, David & Welch, Ivo, 1992. "A Theory of Fads, Fashion, Custom, and Cultural Change in Informational Cascades," Journal of Political Economy, University of Chicago Press, vol. 100(5), pages 992-1026, October. [Downloadable!] (restricted)
  3. Fiore, Annamaria & Morone, Andrea, 2007. "A Simple Note on Informational Cascades," Economics Discussion Papers 2007-21, Kiel Institute for the World Economy. [Downloadable!]
    Other versions:
  4. John D. Hey & Andrea Morone, 2004. "Do Markets Drive Out Lemmings-or Vice Versa?," Economica, London School of Economics and Political Science, vol. 71(284), pages 637-659, November. [Downloadable!] (restricted)
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Cited by:
(explanations, Please 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.)

  1. Fiore, Annamaria & Morone, Andrea, 2007. "A Simple Note on Informational Cascades," Economics Discussion Papers 2007-21, Kiel Institute for the World Economy. [Downloadable!]
    Other versions:
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