Teoria dei Processi Imitativi e Applicazioni Economiche
AbstractThis paper provides a survey of recent theories of herding behaviour, bridging two rather distants strands of literature (roughly, American and European). In the first part of the paper the explanation is based on the idea of asymmetric information and principal-agent approach; these could lead to an over-estimation of public information and under- estimation of private information, leading to informational cascades and interruption of social learning. The second part reviews the second strand of literature on herding, where transition probabilities from one strategy to another, which are stochastic at intividual level, give rise to quasi-deternimistic paths at aggregate level. The concept of self- referential and hetero-referential systems are introduced. Feb. 2004
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Bibliographic InfoPaper provided by EconWPA in its series International Finance with number 0404012.
Length: 34 pages
Date of creation: 13 Apr 2004
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Note: Type of Document - pdf; pages: 34. This paper provides a survey of recent theories of herding behaviour, bridging two rather distants strands of literature (roughly, American and European).
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Herd behaviour; informational cascades; asymmetric information; learning; self-organisation; exchange rate; bubbles; financial crises;
Find related papers by JEL classification:
- F3 - International Economics - - International Finance
- F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
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University of Chicago - George G. Stigler Center for Study of Economy and State
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- Avery, Christopher & Zemsky, Peter, 1998. "Multidimensional Uncertainty and Herd Behavior in Financial Markets," American Economic Review, American Economic Association, vol. 88(4), pages 724-48, September.
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