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Information Aggregation with Random Ordering: Cascades and Overconfidence

  • Markus Noeth

    (University of Mannheim)

  • Martin Weber

    (University of Mannheim)

In economic models, it is usually assumed that agents aggregate their private and all available public information correctly and completely. In this experiment, we identify subjects' updating procedures and analyze the consequences for the aggregation process. Decisions can be based on private information with known quality and observed decisions of other participants. In this setting with random ordering, information cascades are observable and agents' overconfidence has a positive effect on avoiding a non-revealing aggregation process but it reduces welfare in general.

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Paper provided by Econometric Society in its series Econometric Society World Congress 2000 Contributed Papers with number 1592.

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Date of creation: 01 Aug 2000
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Handle: RePEc:ecm:wc2000:1592
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