Informational Cascades with Continuous Action Spaces
The recent literature on informational cascades has nurtured the impression that cascades can occur only if the action space is coarser than the signal space. In particular, it is sometimes claimed that with continuous action spaces cascades are impossible. In this note we present a simple counter-example showing that this conclusion is not necessarily warranted.
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- Vives, X..A., 1995.
"Social Learning and Rational Expectations,"
UFAE and IAE Working Papers
305.95, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
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- Abhijit V. Banerjee, 1992. "A Simple Model of Herd Behavior," The Quarterly Journal of Economics, Oxford University Press, vol. 107(3), pages 797-817.
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