Informational cascades: A mirage?
Experimental research found contradictory results regarding the occurrence of informational cascades. Whereas Anderson and Holt [Anderson, L.R., Holt, C.A., 1997. Information cascades in the laboratory. The American Economic Review 87, 847-862] confirmed the model of Banerjee [Banerjee, A.V., 1992. A simple model of herd behavior. The Quarterly Journal of Economics 107, 797-817], and Bikhchandani et al. [Bikhchandani, S., Hishleifer, D., Welch, I., 1992. A theory of fads, fashion, custom, and cultural change as informational cascades. Journal of Political Economy 100, 992-1026] through lab tests, Huck and Oechssler [Huck, S., Oechssler, J., 2000. Informational cascades in the laboratory: do they occur for the right reasons? Journal of Economic Psychology 21, 661-671] came to contradictory results on crucial issues. This article presents experimental evidence supporting further doubts concerning "Bayesian" informational cascades: just under two thirds of all decisions are characterized by an excessive orientation towards the private signal, and only a small number of the subjects (
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