We review theory and evidence relating to herd behaviour, payoff and reputational interactions, social learning, and informational cascades in capital markets. We offer a simple taxonomy of effects, and evaluate how alternative theories may help explain evidence on the behavior of investors, firms, and analysts. We consider both incentives for parties to engage in herding or cascading, and the incentives for parties to protect against or take advantage of herding or cascading by others.
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Publisher Info
Paper provided by University Library of Munich, Germany in its series MPRA Paper with number
5186.
Length: Date of creation: 19 Dec 2001 Date of revision: Publication status: Published in European Financial Management 1.9(2003): pp. 25-66 Handle: RePEc:pra:mprapa:5186
Find related papers by JEL classification: M14 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - Corporate Culture; Social Responsibility D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information G1 - Financial Economics - - General Financial Markets D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation G3 - Financial Economics - - Corporate Finance and Governance G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Mortgages G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
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