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Signal Accuracy and Informational Cascades

Author

Listed:
  • Ivan Pastine

    (University College Dublin)

  • Tuvana Pastine

    (National University of Ireland Maynooth)

Abstract

We extend the Bikhchandani, Hirshleifer and Welch (1992) informational cascade framework to allow for asymmetric signal accuracy. Simulations demonstrate that even small departures from symmetry may lead to non-monotonic effects of signal accuracy on the likelihood of an inefficient cascade.

Suggested Citation

  • Ivan Pastine & Tuvana Pastine, 2006. "Signal Accuracy and Informational Cascades," Working Papers 200620, School of Economics, University College Dublin.
    • Handle: RePEc:ucn:wpaper:200620
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    References listed on IDEAS

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    Cited by:

    1. Fiore, Annamaria & Morone, Andrea, 2008. "A Simple Note on Informational Cascades," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 2, pages 1-21.
    2. Wu, Jiemai, 2015. "Helpful laymen in informational cascades," Journal of Economic Behavior & Organization, Elsevier, vol. 116(C), pages 407-415.

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    More about this item

    Keywords

    Learning; Herding; Signal Precision;
    All these keywords.

    JEL classification:

    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General

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