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Do Individuals Recognize Cascade Behavior of Others? - An Experimental Study -

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Author Info
Tim Grebe
Julia Schmid
Andreas Stiehler

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Abstract

In an information cascade experiment participants are confronted with artificial predecessors predicting in line with the BHW model (Bikchandani et al., 1992). Using the BDM (Becker et al., 1964) mechanism we study participants' probability perceptions based on maximum prices for participating in the prediction game. We find increasing maximum prices the more coinciding predictions of predecessors are observed, regardless of whether additional information is revealed by these predictions. Individual price patterns of more than two thirds of the participants indicate that cascade behavior of predecessors is not recognized.

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Paper provided by Sonderforschungsbereich 649, Humboldt University, Berlin, Germany in its series SFB 649 Discussion Papers with number SFB649DP2006-079.

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Length: 24 pages
Date of creation: Nov 2006
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Handle: RePEc:hum:wpaper:sfb649dp2006-079

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Related research
Keywords: Information Cascades Bayes' Rule Decision Under Risk and Uncertainty Experimental Economics.

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Find related papers by JEL classification:
C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    Other versions:
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  23. Szymon Borak & Wolfgang Härdle & Stefan Trück & Rafal Weron, 2006. "Convenience Yields for CO2 Emission Allowance Futures Contracts," SFB 649 Discussion Papers SFB649DP2006-076, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany. [Downloadable!]
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  26. Enzo Giacomini & Michael Handel & Wolfgang K. Härdle, 2006. "Time Dependent Relative Risk Aversion," SFB 649 Discussion Papers SFB649DP2006-020, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany. [Downloadable!]
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  29. Harald Uhlig, 2004. "Discussion of "The Source of Historical Economic Fluctuations: An Analysis using Long-Run Restrictions" by Neville Francis and Valerie A. Ramey," SFB 649 Discussion Papers SFB649DP2006-042, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany, revised May 2006. [Downloadable!]
  30. Daniel Hernandez–Hernandez & Alexander Schied, 2006. "A Control Approach to Robust Utility Maximization with Logarithmic Utility and Time-Consistent Penalties," SFB 649 Discussion Papers SFB649DP2006-061, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany. [Downloadable!]
  31. Dominique Demougin & Oliver Fabel, 2006. "The Division of Ownership in New Ventures," SFB 649 Discussion Papers SFB649DP2006-047, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany. [Downloadable!]
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  35. Ralf Brüggemann & Wolfgang Härdle & Julius Mungo & Carsten Trenkler, 2006. "VAR Modeling for Dynamic Semiparametric Factors of Volatility Strings," SFB 649 Discussion Papers SFB649DP2006-011, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany. [Downloadable!]
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  38. Dominique Demougin & Anja Schöttner, 2006. "Technological Choice under Organizational Diseconomies of Scale," SFB 649 Discussion Papers SFB649DP2006-028, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany. [Downloadable!]
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Dirk Temme & Henning Kreis & Lutz Hildebrandt, 2006. "PLS Path Modeling – A Software Review," SFB 649 Discussion Papers SFB649DP2006-084, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany. [Downloadable!]
  2. Jenny Kragl & Julia Schmid, 2006. "Relational Contracts and Inequity Aversion," SFB 649 Discussion Papers SFB649DP2006-085, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany. [Downloadable!]
  3. Dirk Temme & Lutz Hildebrandt, 2006. "Formative Measurement Models in Covariance Structure Analysis: Specification and Identification," SFB 649 Discussion Papers SFB649DP2006-083, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany. [Downloadable!]
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