Informational Herding and Optimal Experientation
We explore the constrainned efficient observational learning model - as when individuals care about successors, or are so induced by an informationally- constrained social planner. We find that when the herding externality is correctly internali zed in this fashion, incorrect herds still obtain.
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- Rothschild, Michael, 1974. "A two-armed bandit theory of market pricing," Journal of Economic Theory, Elsevier, vol. 9(2), pages 185-202, October.
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