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Are Longer Cascades More Stable?

Author

Listed:
  • Dorothea Kübler

    (Technical University Berlin,)

  • Georg Weizsäcker

    (London School of Economics,)

Abstract

Yes, they are. We consider data from experimental cascade games that were run in different laboratories, and find uniformly that subjects are more willing to follow the crowd, the bigger the crowd is-although the decision makers who are added to the crowd should in theory simply follow suit and hence reveal no information. This correlation of length and strength of cascades appears consistently across games with different parameters and different choice sets for the subjects. It is also observed in games where it runs counter to the theoretical prediction, so behavior moves away from equilibrium play over the stages of the games. (JEL: C72, C92, D82) Copyright (c) 2005 The European Economic Association.

Suggested Citation

  • Dorothea Kübler & Georg Weizsäcker, 2005. "Are Longer Cascades More Stable?," Journal of the European Economic Association, MIT Press, vol. 3(2-3), pages 330-339, 04/05.
  • Handle: RePEc:tpr:jeurec:v:3:y:2005:i:2-3:p:330-339
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    Citations

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    Cited by:

    1. Anthony Ziegelmeyer & Frédéric Koessler & Juergen Bracht & Eyal Winter, 2010. "Fragility of information cascades: an experimental study using elicited beliefs," Experimental Economics, Springer;Economic Science Association, vol. 13(2), pages 121-145, June.
    2. Rubin, Jared, 2014. "Centralized institutions and cascades," Journal of Comparative Economics, Elsevier, vol. 42(2), pages 340-357.
    3. Jacob K. Goeree & Thomas R. Palfrey & Brian W. Rogers & Richard D. McKelvey, 2007. "Self-Correcting Information Cascades," Review of Economic Studies, Oxford University Press, vol. 74(3), pages 733-762.
    4. Drehmann, Mathias & Oechssler, Jorg & Roider, Andreas, 2007. "Herding with and without payoff externalities -- an internet experiment," International Journal of Industrial Organization, Elsevier, vol. 25(2), pages 391-415, April.
    5. Grebe, Tim & Schmid, Julia & Stiehler, Andreas, 2008. "Do individuals recognize cascade behavior of others? - An experimental study," Journal of Economic Psychology, Elsevier, vol. 29(2), pages 197-209, April.
    6. Jonathan E. Alevy & Michael S. Haigh & John List, 2006. "Information Cascades: Evidence from An Experiment with Financial Market Professionals," NBER Working Papers 12767, National Bureau of Economic Research, Inc.
    7. Georg Weizsacker, 2010. "Do We Follow Others When We Should? A Simple Test of Rational Expectations," American Economic Review, American Economic Association, vol. 100(5), pages 2340-2360, December.
    8. Antonio Guarino & Steffen Huck & Heike Harmgart, 2008. "When half the truth is better than the truth: A Theory of aggregate information cascades," WEF Working Papers 0046, ESRC World Economy and Finance Research Programme, Birkbeck, University of London.
    9. repec:feb:framed:0003 is not listed on IDEAS

    More about this item

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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