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Information aggregation with random ordering : cascades and overconficence

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  • Nöth, Markus
  • Weber, Martin

Abstract

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.

Suggested Citation

  • Nöth, Markus & Weber, Martin, 2000. "Information aggregation with random ordering : cascades and overconficence," Papers 00-34, Sonderforschungsbreich 504.
  • Handle: RePEc:mnh:spaper:2825
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    File URL: https://madoc.bib.uni-mannheim.de/2825/1/dp00_34.pdf
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    More about this item

    Keywords

    aggregation ; Bayes' rule ; cascades ; experiment ; overconfidence;
    All these keywords.

    JEL classification:

    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior

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