Management fads, pedagogies, and other soft technologies
We present a model for the diffusion of management fads and other technologies which lack clear objective evidence about their merits. The choices made by non-Bayesian adopters reflect both their own evaluations and the social influence of their peers. We show, both analytically and computationally, that the dynamics lead to outcomes that appear to be deterministic in spite of being governed by a stochastic process. In other words, when the objective evidence about a technology is weak, the evolution of this process quickly settles down to a fraction of adopters that is not predetermined. When the objective evidence is strong, the proportion of adopters is determined by the quality of the evidence and the adopters' competence.
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References listed on IDEAS
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- Colin Camerer, 1998. "Bounded Rationality in Individual Decision Making," Experimental Economics, Springer;Economic Science Association, vol. 1(2), pages 163-183, September.
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Levine's Working Paper Archive
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"Limited depth of reasoning and failure of cascade formation in the laboratory,"
SFB 373 Discussion Papers
2001,3, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
- Dorothea Kübler & Georg Weizsäcker, 2004. "Limited Depth of Reasoning and Failure of Cascade Formation in the Laboratory," Review of Economic Studies, Oxford University Press, vol. 71(2), pages 425-441.
- Abhijit V. Banerjee, 1992. "A Simple Model of Herd Behavior," The Quarterly Journal of Economics, Oxford University Press, vol. 107(3), pages 797-817.
- Welch, Ivo, 1992. " Sequential Sales, Learning, and Cascades," Journal of Finance, American Finance Association, vol. 47(2), pages 695-732, June.
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