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Herd Behaviour as an Incentive Scheme

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  • Nicolas Melissas

    (Institut d'Analisi Economica)

Abstract

This paper presents a model of technology invention in an emerging market. Managers wait and adopt the standard technology in the hope to free-ride on the effort level of another manager who may invent a superior technology. The more managers who adopt the standard technology, the more their successors believe that probably the superior technology doesn't exist. As this hampers the successors' incentives to innovate, herding in my model reduces the scope of strategic waiting.

Suggested Citation

  • Nicolas Melissas, 2000. "Herd Behaviour as an Incentive Scheme," Econometric Society World Congress 2000 Contributed Papers 0425, Econometric Society.
    • Handle: RePEc:ecm:wc2000:0425
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    Cited by:

    1. Wagner, Peter A. & Klein, Nicolas, 2022. "Strategic investment and learning with private information," Journal of Economic Theory, Elsevier, vol. 204(C).
    2. Nilkanth Kumar & Nirmal Kumar Raut & Suchita Srinivasan, 2022. "Herd behavior in the choice of motorcycles: Evidence from Nepal," CER-ETH Economics working paper series 22/366, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
    3. VERGARI, Cecilia, 2004. "Herd behaviour, strategic complementarities and technology adoption," LIDAM Discussion Papers CORE 2004063, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    4. Andonova, Veneta & Rodriguez, Yeny & Sanchez, Ivan Dario, 2013. "When waiting is strategic: Evidence from Colombian M&As 1995–2008," Journal of Business Research, Elsevier, vol. 66(10), pages 1736-1742.
    5. Amy Wenxuan Ding & Shibo Li, 2019. "Herding in the consumption and purchase of digital goods and moderators of the herding bias," Journal of the Academy of Marketing Science, Springer, vol. 47(3), pages 460-478, May.

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