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Minority Opinion and Herd Behaviour

Author

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  • Sgroi, D.

Abstract

Is majority opinion a better guide to action than a minority view? This paper demonstrates that a direct application of rational herding theory to this novel area can produce a surprisingly counter-intuitive result: given (i) the minority has a clear conformist view and (ii) decision-makers learn through observation as in a herding model, then size does not matter when evaluating whether some groups make better decisions than others. Extending this further we argue that it may be advantageous for risk averse agents to support a form of positive discrimination, that new generations have a largely ambiguous impact, and that the use of electoral colleges can be supported on informational grounds.

Suggested Citation

  • Sgroi, D., 2004. "Minority Opinion and Herd Behaviour," Cambridge Working Papers in Economics 0421, Faculty of Economics, University of Cambridge.
  • Handle: RePEc:cam:camdae:0421
    Note: ET, PE
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    File URL: http://www.econ.cam.ac.uk/research-files/repec/cam/pdf/cwpe0421.pdf
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    Cited by:

    1. Annamaria Fiore & Andrea Morone, 2005. "Is playing alone in the darkness sufficient to prevent informational cascades?," Papers on Strategic Interaction 2005-09, Max Planck Institute of Economics, Strategic Interaction Group.

    More about this item

    Keywords

    minorities; majorities; conformity; observational learning; herding.;

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D79 - Microeconomics - - Analysis of Collective Decision-Making - - - Other
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • D69 - Microeconomics - - Welfare Economics - - - Other

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