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Tie-breaking Rules and Informational Cascades: A Note

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  • Frédéric KOESSLER
  • Anthony ZIEGELMEYER

Abstract

In Bikhchandani, Hirshleifer, and Welch\'s (1992) specific model, it is showed that conformist behaviors can emerge due to information externalities. In this note we establish that this result, based on `informational cascades\', heavily depends on the choice of a particular tie-breaking convention. Relaxing this assumption allows for other equilibria to exist, in which informational cascades are not necessarily observed. Our findings also have implications for the analysis of experimental data on informational cascades. In this respect, we argue that further experiments should be based on other experimental designs.

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File URL: http://www.beta-umr7522.fr/productions/publications/2000/2000-09.pdf
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Bibliographic Info

Paper provided by Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg in its series Working Papers of BETA with number 2000-09.

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Date of creation: 2000
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Handle: RePEc:ulp:sbbeta:2000-09

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Keywords: Tie-breaking rules; informational cascades; experimental economics.;

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  1. Anderson, Lisa R & Holt, Charles A, 1997. "Information Cascades in the Laboratory," American Economic Review, American Economic Association, American Economic Association, vol. 87(5), pages 847-62, December.
  2. Bikhchandani, Sushil & Hirshleifer, David & Welch, Ivo, 1992. "A Theory of Fads, Fashion, Custom, and Cultural Change in Informational Cascades," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 100(5), pages 992-1026, October.
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Cited by:
  1. Oberhammer, Clemens & Stiehler, Andreas, 2001. "Does cascade behavior in information cascades reflect Bayesian updating? An experimental study," SFB 373 Discussion Papers, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes 2001,32, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
  2. Sofia Pessoa e Costa & Stéphane Robin, 2007. "The Impact Of Training Programmes On Wages In France: An Evaluation Of The “Qualifying Contract” Using Propensity Scores," Working Papers of BETA, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg 2007-18, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
  3. Rachel Levy & Paul Muller, 2006. "Do academic laboratories correspond to scientific communities? Evidence from a large European university," Working Papers of BETA, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg 2006-15, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
  4. Jonathan E. Alevy & Michael S. Haigh & John List, 2006. "Information Cascades: Evidence from An Experiment with Financial Market Professionals," NBER Working Papers 12767, National Bureau of Economic Research, Inc.
  5. Alevy, Jonathan E. & Haigh, Michael S. & List, John A., 2003. "Information Cascades: Evidence From A Field Experiment With Financial Market Professionals," Working Papers, University of Maryland, Department of Agricultural and Resource Economics 28608, University of Maryland, Department of Agricultural and Resource Economics.
  6. Tapas K. Mishra, 2006. "A Further Look into the Demography-based GDP Forecasting Method," Working Papers of BETA, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg 2006-17, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
  7. Estelle Dhont-Peltrault & Etienne Pfister, 2007. "R&D cooperation versus R&D subcontracting: empirical evidence from French survey data," Working Papers of BETA, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg 2007-17, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
  8. Giovanni Dosi & Patrick Llerena & Mauro Sylos Labini, 2005. "Science-Technology-Industry Links and the ”European Paradox”: Some Notes on the Dynamics of Scientific and Technological Research in Europe," LEM Papers Series, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy 2005/02, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
  9. Meixing DAI & Moïse SIDIROPOULOS & Eleftherios SPYROMITROS, 2007. "La transparence de la politique monétaire et la dynamique des marchés financiers," Working Papers of BETA, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg 2007-19, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
  10. Stéphane Betrand & Kene Boun My & Alban Verchère, 2005. "Faire émerger la coopération internationale : une approche expérimentale comparée du bilatéralisme et du multilatéralisme," Working Papers of BETA, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg 2005-13, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
  11. Nicolas Carayol & Pascale Roux, 2006. "A strategic model of complex networks formation," Working Papers of BETA, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg 2006-02, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
  12. Jalal EL OUARDIGHI & Rabija SOMUN-KAPETANOVIC, 2006. "Convergence des contributions aux inégalités de richesse dans le développement des pays européens," Working Papers of BETA, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg 2006-19, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
  13. Li Qin & Eleftherios Spyromitros & Moïse Sidiropoulos, 2007. "Monetary Policy with Uncertain Central Bank Preferences for Robustness," Working Papers of BETA, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg 2007-23, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
  14. Meixing DAI, 2007. "A two-pillar strategy to keep inflation expectations at bay: A basic theoretical framework," Working Papers of BETA, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg 2007-20, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
  15. Nicolas Carayol & Pascale Roux & Murat Yıldızoglu, 2006. "Coordination failures in network formation," Working Papers of BETA, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg 2006-03, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
  16. Gisèle Umbhauer, 2007. "De l’amiante au chrysotile, un glissement stratégique dans la désinformation," Working Papers of BETA, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg 2007-15, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
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