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Herding with and without Payoff Externalities - An Internet Experiment

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Author Info
Mathias Drehmann
Jörg Oechssler
Andreas Roider

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Abstract

Most real world situations which are susceptible to herding are also characterized by direct payoff externalities. Yet, the bulk of the theoretical and experimental literature focuses on pure informational externalities. In this paper we study several different forms of payoff externalities that interact with a standard herding model. More than 6000 subjects, including a subsample of 267 consultants from an international consulting firm, participated in an internet experiment. We also replicate and review earlier cascade experiments. Finally, we study reputation effects in the context of herding.

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Paper provided by University of Bonn, Germany in its series Bonn Econ Discussion Papers with number bgse15_2004.

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Length: 26
Date of creation: Aug 2004
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Handle: RePEc:bon:bonedp:bgse15_2004

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Postal: Bonn Graduate School of Economics, University of Bonn, Adenauerallee 24 - 26, 53113 Bonn, Germany
Fax: +49 228 73 9221
Web page: http://www.bgse.uni-bonn.de/index.php?id=494

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Related research
Keywords: information cascades herding network effects experiment internet

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Find related papers by JEL classification:
C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
D8 - Microeconomics - - Information, Knowledge, and Uncertainty

This paper has been announced in the following NEP Reports:

References listed on IDEAS
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