Minority Opinion and Herd Behaviour
AbstractIs majority opinion a better guide to action than a minority view? This paper demonstrates that a direct application of rational herding theory to this novel area can produce a surprisingly counter-intuitive result: given (i) the minority has a clear conformist view and (ii) decision-makers learn through observation as in a herding model, then size does not matter when evaluating whether some groups make better decisions than others. Extending this further we argue that it may be advantageous for risk averse agents to support a form of positive discrimination, that new generations have a largely ambiguous impact, and that the use of electoral colleges can be supported on informational grounds.
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Bibliographic InfoPaper provided by Faculty of Economics, University of Cambridge in its series Cambridge Working Papers in Economics with number 0421.
Date of creation: Feb 2004
Date of revision:
Note: ET, PE
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Web page: http://www.econ.cam.ac.uk/index.htm
minorities; majorities; conformity; observational learning; herding.;
Find related papers by JEL classification:
- D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
- D79 - Microeconomics - - Analysis of Collective Decision-Making - - - Other
- D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
- D69 - Microeconomics - - Welfare Economics - - - Other
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-04-11 (All new papers)
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- Annamaria Fiore & Andrea Morone, 2005.
"Is playing alone in the darkness sufficient to prevent informational cascades?,"
Papers on Strategic Interaction
2005-09, Max Planck Institute of Economics, Strategic Interaction Group.
- Annamaria Fiore & Andrea Morone, 2005. "Is playing alone in the darkness sufficient to prevent informational cascades?," Experimental 0503002, EconWPA.
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