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Herding with collective preferences

  • S. Ali

    ()

  • Navin Kartik

    ()

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. 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.
  2. Smith, L. & Sorensen, P., 1996. "Pathological Outcomes of Observational Learning," Economics Papers 115, Economics Group, Nuffield College, University of Oxford.
  3. 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.
  4. Timothy Feddersen & Wolfgang Pesendorfer, 1997. "Voting Behavior and Information Aggregation in Elections with Private Information," Econometrica, Econometric Society, vol. 65(5), pages 1029-1058, September.
  5. Brian Knight & Nathan Schiff, 2010. "Momentum and Social Learning in Presidential Primaries," Journal of Political Economy, University of Chicago Press, vol. 118(6), pages 1110 - 1150.
  6. Zvika NEEMAN & Gerhard O. OROSEL, 1997. "Herding and the Winner's Curse in Markets with Sequential Bids," Vienna Economics Papers vie9711, University of Vienna, Department of Economics.
  7. Steven Callander, 2007. "Bandwagons and Momentum in Sequential Voting," Review of Economic Studies, Oxford University Press, vol. 74(3), pages 653-684.
  8. James Andreoni, 2006. "Leadership Giving in Charitable Fund-Raising," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 8(1), pages 1-22, 01.
  9. 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.
  10. Drew Fudenberg & Jean Tirole, 1991. "Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262061414, June.
  11. Sourav Bhattacharya, 2006. "Preference Monotonicity and Information Aggregation in Elections," Working Papers 325, University of Pittsburgh, Department of Economics, revised Dec 2008.
  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. Kreps, David M & Wilson, Robert, 1982. "Sequential Equilibria," Econometrica, Econometric Society, vol. 50(4), pages 863-94, July.
  14. 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.
  15. Banerjee, Abhijit V, 1992. "A Simple Model of Herd Behavior," The Quarterly Journal of Economics, MIT Press, vol. 107(3), pages 797-817, August.
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