Homogeneous Actions and Hetergeneous Beliefs: Experimental Evidence on the Formation of Information Cascades
AbstractTheories on the formation of information cascades have been tested in experimental settings in which players publicly announce binary expectations of a binary event based on private signals and preceding public announcements. We replicate and supplement the experimental data collection by privately eliciting beliefs on the signals and the event. Therefore, we are able to directly observe how players update expectations and form inferences based on the announcements of others. Past studies have focused on one implication of cascade theory--the realization of cascades. Yet the prediction of the model is stronger than simply that players will follow the example of others once a cascade has begun. In fact, new public announcements are predicted to have no effect on the subjective expectations of others, because these announcements contain no information about private signals. We see in our data that cascade behavior arises as frequently as in previous cascade experiments without belief elicitation. Yet, we find evidence of systematic heterogeneity in belief-updating rules across subjects. As a result, a Bayesian decision maker may extract information about private signals from public announcements made during a cascade. In fact, reported subjective probabilities are revised in response to announcements after a cascade has begun.
Download InfoTo our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
Bibliographic InfoPaper provided by Econometric Society in its series Econometric Society 2004 North American Winter Meetings with number 64.
Date of creation: 11 Aug 2004
Date of revision:
Contact details of provider:
Phone: 1 212 998 3820
Fax: 1 212 995 4487
Web page: http://www.econometricsociety.org/pastmeetings.asp
More information through EDIRC
information cascades; belief updating; probability elicitation;
Find related papers by JEL classification:
- C9 - Mathematical and Quantitative Methods - - Design of Experiments
- D8 - Microeconomics - - Information, Knowledge, and Uncertainty
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Morone, Andrea & Fiore, Annamaria & Sandri, Serena, 2007.
"On the absorbability of herd behaviour and informational cascades: an experimental analysis,"
Dresden Discussion Paper Series in Economics
15/07, Dresden University of Technology, Faculty of Business and Economics, Department of Economics.
- Morone, Andrea & Fiore, Annamaria & Sandri, Serena, 2008. "On The Absorbability Of Herd Behaviour And Informational Cascades: An Experimental Analysis," MPRA Paper 6884, University Library of Munich, Germany.
- repec:ebl:ecbull:v:3:y:2006:i:11:p:1-11 is not listed on IDEAS
- Jacob K. Goeree & Thomas R. Palfrey & Brian W. Rogers & Richard D. McKelvey, 2006.
"Self-Correcting Information Cascades,"
321307000000000211, UCLA Department of Economics.
- Jacob Goeree & Thomas Palfrey & Brian Rogers, 2004. "Self-Correcting Information Cascades," Levine's Bibliography 122247000000000153, UCLA Department of Economics.
- Goeree, Jacob & Palfrey, Thomas & Rogers, Brian & McKelvey, Richard, 2004. "Self-correcting Information Cascades," Working Papers 1197, California Institute of Technology, Division of the Humanities and Social Sciences.
- Shunichiro Sasaki & Toshiji Kawagoe, 2007. "Belief Updating in Individual and Social Learning: A Field Experiment on the Internet," ISER Discussion Paper 0690, Institute of Social and Economic Research, Osaka University.
- Drehmann, Mathias & Oechssler, Jorg & Roider, Andreas, 2007.
"Herding with and without payoff externalities -- an internet experiment,"
International Journal of Industrial Organization,
Elsevier, vol. 25(2), pages 391-415, April.
- Mathias Drehmann & Jörg Oechssler & Andreas Roider, 2004. "Herding with and without Payoff Externalities - An Internet Experiment," Bonn Econ Discussion Papers bgse15_2004, University of Bonn, Germany.
- Drehmann, Mathias & Oechssler, Jörg & Roider, Andreas, 2005. "Herding With and Without Payoff Externalities - An Internet Experiment," CEPR Discussion Papers 5310, C.E.P.R. Discussion Papers.
- Mathias Drehmann & Jörg Oechssler & Andreas Roider, 2005. "Herding with and without Payoff Externalities - An Internet Experiment," Working Papers 0420, University of Heidelberg, Department of Economics, revised Apr 2005.
- Dominitz, Jeff & Hung, Angela A., 2009. "Empirical models of discrete choice and belief updating in observational learning experiments," Journal of Economic Behavior & Organization, Elsevier, vol. 69(2), pages 94-109, February.
- Neri, Claudia & Manski, Charles, 2012. "First- and Second-order Subjective Expectations in Strategic Decision-Making: Experimental Evidence," Economics Working Paper Series 1206, University of St. Gallen, School of Economics and Political Science.
- Adeline Delavande, 2008. "Measuring revisions to subjective expectations," Journal of Risk and Uncertainty, Springer, vol. 36(1), pages 43-82, February.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christopher F. Baum).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.