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Herding, Social Preferences and (Non-) Conformity

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  • Luca Corazzini
  • Ben Greiner

Abstract

We study the role of social preferences and conformity in explaining herding behavior in anonymous risky environments. In an experiment similar to information cascade settings, but with no private information, we find no evidence for conformity. On the contrary, we observe a significant amount of non-conforming behavior, which cannot be attributed to errors.

Suggested Citation

  • Luca Corazzini & Ben Greiner, 2005. "Herding, Social Preferences and (Non-) Conformity," Working Paper Series in Economics 21, University of Cologne, Department of Economics, revised 24 Jan 2007.
    • Handle: RePEc:kls:series:0021
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    Cited by:

    1. T. T. Chen & B. Zheng & Y. Li & X. F. Jiang, 2017. "New approaches in agent-based modeling of complex financial systems," Papers 1703.06840, arXiv.org.
    2. Bernado Moreno & María del Pino Ramos-Sosa & Ismael Rodríguez-Lara, 2016. "Conformity, information and truthful voting," Working Papers 2016-01, Universidad de Málaga, Department of Economic Theory, Málaga Economic Theory Research Center.
    3. Béatrice BOULU-RESHEF & Nina RAPOPORT, "undated". "Voluntary contributions in cascades: The tragedy of ill-informed leadership," LEO Working Papers / DR LEO 2824, Orleans Economics Laboratory / Laboratoire d'Economie d'Orleans (LEO), University of Orleans.
    4. Gortner, Paul J. & van der Weele, Joël J., 2019. "Peer effects and risk sharing in experimental asset markets," European Economic Review, Elsevier, vol. 116(C), pages 129-147.
    5. Jacob K. Goeree & Leeat Yariv, 2015. "Conformity in the lab," Journal of the Economic Science Association, Springer;Economic Science Association, vol. 1(1), pages 15-28, July.
    6. G. Rejikumar & Aswathy Asokan-Ajitha & Sofi Dinesh & Ajay Jose, 2022. "The role of cognitive complexity and risk aversion in online herd behavior," Electronic Commerce Research, Springer, vol. 22(2), pages 585-621, June.
    7. Delfino, Alexia & Marengo, Luigi & Ploner, Matteo, 2016. "I did it your way. An experimental investigation of peer effects in investment choices," Journal of Economic Psychology, Elsevier, vol. 54(C), pages 113-123.
    8. Anita Gantner & Rudolf Kerschbamer, 2018. "Social interaction effects: The impact of distributional preferences on risky choices," Journal of Risk and Uncertainty, Springer, vol. 56(2), pages 141-164, April.
    9. March, Christoph & Ziegelmeyer, Anthony, 2020. "Altruistic observational learning," Journal of Economic Theory, Elsevier, vol. 190(C).
    10. Paolo Crosetto & Antonio Filippin, 2017. "The Sound of Others: Surprising Evidence of Conformist Behavior," Southern Economic Journal, John Wiley & Sons, vol. 83(4), pages 1038-1051, April.
    11. Brice Corgnet & Camille Cornand & Nobuyuki Hanaki, 2021. "Risk-Taking and Tail Events Across Trading Institutions," Working Papers 2117, Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon.
    12. Fatas, Enrique & Hargreaves Heap, Shaun P. & Rojo Arjona, David, 2018. "Preference conformism: An experiment," European Economic Review, Elsevier, vol. 105(C), pages 71-82.
    13. Paul J. Healy & John Conlon & Yeochang Yoon, 2016. "Information Cascades with Informative Ratings: An Experimental Test," Working Papers 16-05, Ohio State University, Department of Economics.
    14. Egebark, Johan & Ekström, Mathias, 2011. "Like What You Like or Like What Others Like? Conformity and Peer Effects on Facebook," Working Paper Series 886, Research Institute of Industrial Economics.
    15. Bernardo Moreno & María del Pino Ramos-Sosa & Ismael Rodriguez-Lara, 2019. "Conformity and truthful voting under different voting rules," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 53(2), pages 261-282, August.
    16. Trautmann, Stefan T. & Zeckhauser, Richard J., 2013. "Shunning uncertainty: The neglect of learning opportunities," Games and Economic Behavior, Elsevier, vol. 79(C), pages 44-55.
    17. Paul Gortner & Joël van der Weele, "undated". "Peer Effects and Risk Sharing in Experimental Asset Markets," Tinbergen Institute Discussion Papers 19-027/I, Tinbergen Institute.
    18. Oz Shy, 2011. "A Short Survey of Network Economics," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 38(2), pages 119-149, March.
    19. Fabian Dvorak & Urs Fischbacher & Katrin Schmelz, 2020. "Incentives for Conformity and Anticonformity," TWI Research Paper Series 122, Thurgauer Wirtschaftsinstitut, Universität Konstanz.
    20. Nilkanth Kumar & Nirmal Kumar Raut & Suchita Srinivasan, 2022. "Herd behavior in the choice of motorcycles: Evidence from Nepal," CER-ETH Economics working paper series 22/366, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
    21. Van Parys, Jessica & Ash, Elliott, 2018. "Sequential decision-making with group identity," Journal of Economic Psychology, Elsevier, vol. 69(C), pages 1-18.
    22. Zhen, Xueping & (George) Cai, Gangshu & Song, Reo & Jang, Sungha, 2019. "The effects of herding and word of mouth in a two-period advertising signaling model," European Journal of Operational Research, Elsevier, vol. 275(1), pages 361-373.
    23. Brice Corgnet & Camille Cornand & Nobuyuki Hanaki, 2021. "Risk-Taking and Tail Events Across Trading Institutions," Working Papers hal-03468913, HAL.
    24. Chen, Ting-Ting & Zheng, Bo & Li, Yan & Jiang, Xiong-Fei, 2018. "Information driving force and its application in agent-based modeling," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 496(C), pages 593-601.

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    More about this item

    Keywords

    herding; information cascades; conformity; non-conformity; laboratory experiments;
    All these keywords.

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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