Signal Qualities, Order of Decisions, and Informational Cascades: Experimental Evidence
This experimental study investigates the effect of signal strength on the formation of informational cascades by introducing heterogeneous signal qualities associated with the fixed order of decisions on the two different decision-making systems, anti-seniority and seniority. Major findings include that complete cascades occur more frequently in seniority than in anti-seniority, that seniority is more efficient than anti-seniority, but increases the risk of creating negative cascades, and that private signals can be extracted more effectively in anti-seniority than in seniority. For both treatments, rational complete cascades occur less frequently than those suggested by the Bayesian model. For the heuristic subjects employed, the anchoring effect of private signals is partially identified.
Volume (Year): 3 (2005)
Issue (Month): 34 ()
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References listed on IDEAS
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- Huck, Steffen & Oechssler, Jorg, 2000.
"Informational cascades in the laboratory: Do they occur for the right reasons?,"
Journal of Economic Psychology,
Elsevier, vol. 21(6), pages 661-671, December.
- Steffen Huck & Joerg Oechssler, 1999. "Informational cascades in the laboratory: Do they occur for the right reasons?," Experimental 9901001, EconWPA.
- Bogaçhan Çelen & Shachar Kariv, 2004. "Distinguishing Informational Cascades from Herd Behavior in the Laboratory," American Economic Review, American Economic Association, vol. 94(3), pages 484-498, June.
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- Kraemer, Carlo & Noth, Markus & Weber, Martin, 2006. "Information aggregation with costly information and random ordering: Experimental evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 59(3), pages 423-432, March.
- Kraemer, Carlo & Nöth, Markus & Weber, Martin, 2000. "Information Aggregation with Costly Information and Random Ordering: Experimental Evidence," Sonderforschungsbereich 504 Publications 00-35, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim.
- Kraemer, Carlo & Nöth, Markus & Weber, Martin, 2000. "Information aggregation with costly information and random ordering : experimental evidence," Papers 00-35, Sonderforschungsbreich 504.
- 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, vol. 100(5), pages 992-1026, October.
- Sushil Bikhchandani & David Hirshleifer & Ivo Welch, 2010. "A theory of Fads, Fashion, Custom and cultural change as informational Cascades," Levine's Working Paper Archive 1193, David K. Levine.
- Anderson, Lisa R & Holt, Charles A, 1997. "Information Cascades in the Laboratory," American Economic Review, American Economic Association, vol. 87(5), pages 847-862, December. Full references (including those not matched with items on IDEAS)
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