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Herding with collective preferences

This paper studies a simple model of observational learning where agents care not only about the information of others but also about their actions. We show that despite complex strategic considerations that arise from forward-looking incentives, herd behavior can arise in equilibrium. The model encompasses applications such as sequential elections, public good contributions, and leadership charitable giving. Copyright Springer-Verlag 2012

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File URL: http://hdl.handle.net/10.1007/s00199-011-0609-7
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Article provided by Springer in its journal Economic Theory.

Volume (Year): 51 (2012)
Issue (Month): 3 (November)
Pages: 601-626

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Handle: RePEc:spr:joecth:v:51:y:2012:i:3:p:601-626
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  1. Andreoni,J., 2002. "Leadership giving in charitable fund-raising," Working papers 13, Wisconsin Madison - Social Systems.
  2. Drew Fudenberg & Jean Tirole, 1991. "Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262061414, June.
  3. David Kreps & Robert Wilson, 1998. "Sequential Equilibria," Levine's Working Paper Archive 237, David K. Levine.
  4. Sourav Bhattacharya, 2013. "Preference Monotonicity and Information Aggregation in Elections," Econometrica, Econometric Society, vol. 81(3), pages 1229-1247, 05.
  5. Goeree, Jacob & Palfrey, Thomas & Rogers, Brian, 2003. "Social learning with private and common values," Working Papers 1187, California Institute of Technology, Division of the Humanities and Social Sciences.
  6. John A. List & David Lucking-Reiley, 2000. "The Effects of Seed Money and Refunds on Charitable Giving: Experimental Evidence from a University Capital Campaign," Vanderbilt University Department of Economics Working Papers 0008, Vanderbilt University Department of Economics.
  7. Brian Knight & Nathan Schiff, 2007. "Momentum and Social Learning in Presidential Primaries," NBER Working Papers 13637, National Bureau of Economic Research, Inc.
  8. Timothy Feddersen & Wolfgang Pesendorfer, 1994. "Voting Behavior and Information Aggregation in Elections with Private Information," Discussion Papers 1117, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  9. Smith, L. & Sorensen, P., 1996. "Pathological Outcomes of Observational Learning," Economics Papers 115, Economics Group, Nuffield College, University of Oxford.
  10. Neeman, Zvika & Orosel, Gerhard O., 1999. "Herding and the Winner's Curse in Markets with Sequential Bids," Journal of Economic Theory, Elsevier, vol. 85(1), pages 91-121, March.
  11. Jay Pil Choi, 1997. "Herd Behavior, the 'Penguin Effect,' and the Suppression of Informational Diffusion: An Analysis of Informational Externalities and Payoff Interdependency," RAND Journal of Economics, The RAND Corporation, vol. 28(3), pages 407-425, Autumn.
  12. Ronny Razin, 2003. "Signaling and Election Motivations in a Voting Model with Common Values and Responsive Candidates," Econometrica, Econometric Society, vol. 71(4), pages 1083-1119, 07.
  13. Banerjee, Abhijit V, 1992. "A Simple Model of Herd Behavior," The Quarterly Journal of Economics, MIT Press, vol. 107(3), pages 797-817, August.
  14. 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.
  15. Steven Callander, 2007. "Bandwagons and Momentum in Sequential Voting," Review of Economic Studies, Oxford University Press, vol. 74(3), pages 653-684.
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