Herd behavior, the "Penguin effect", and the suppression of informational diffusion: An analysis of informational externalities and payoff interdependency
AbstractThis article analyzes a technology adoption process in which the effect of informational spillover interacts with network externalities. The interplay of informational externalities and payoff interdependency induces risk-averse and clustering behavior in the technology-adoption process. The analysis differs from the herd behavior literature in focusing on how the herd behavior of subsequent users influences the initial adoption decision. Moreover, herd behavior in this article stems from each agent's desire to inhibit the revelation of new information that can be used in a way detrimental to her, rather than from each agent's effort to free-ride on information contained in the decisions made by predecessors.
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Bibliographic InfoPaper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 1994-62.
Date of creation: 1994
Date of revision:
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Web page: http://center.uvt.nl
Technology; Information; Econometric Models; Group Behaviour;
Other versions of this item:
- Jay Pil Choi, 1997. "Herd Behavior, the 'Penguin Effect,' and the Suppression of Informational Diffusion: An Analysis of Informational Externalities and Payoff Interdependency," RAND Journal of Economics, The RAND Corporation, vol. 28(3), pages 407-425, Autumn.
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