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Informational Cascades with Continuous Action Spaces

Author

Listed:
  • Steffen Huck

    (Humboldt University, Berlin)

  • Joerg Oechssler

    (Humboldt University)

Abstract

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.

Suggested Citation

  • Steffen Huck & Joerg Oechssler, 1997. "Informational Cascades with Continuous Action Spaces," Game Theory and Information 9710002, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpga:9710002
    Note: pages: 6
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    References listed on IDEAS

    as
    1. Vives, Xavier, 1996. "Social learning and rational expectations," European Economic Review, Elsevier, vol. 40(3-5), pages 589-601, April.
    2. Abhijit V. Banerjee, 1992. "A Simple Model of Herd Behavior," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(3), pages 797-817.
    3. Gul, Faruk & Lundholm, Russell, 1995. "Endogenous Timing and the Clustering of Agents' Decisions," Journal of Political Economy, University of Chicago Press, vol. 103(5), pages 1039-1066, October.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Antonio Guarino & Philippe Jehiel, 2013. "Social Learning with Coarse Inference," American Economic Journal: Microeconomics, American Economic Association, vol. 5(1), pages 147-174, February.
    2. Antonio Guarino & Philippe Jehiel, 2009. "Social Leanring with Course Inference," WEF Working Papers 0050, ESRC World Economy and Finance Research Programme, Birkbeck, University of London.
    3. Ali, S. Nageeb, 2018. "On the role of responsiveness in rational herds," Economics Letters, Elsevier, vol. 163(C), pages 79-82.
    4. Oberholzer-Gee, Felix, 2008. "Nonemployment stigma as rational herding: A field experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 65(1), pages 30-40, January.
    5. Efraim Berkovich, 2011. "Search and herding effects in peer-to-peer lending: evidence from prosper.com," Annals of Finance, Springer, vol. 7(3), pages 389-405, August.

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    More about this item

    Keywords

    herding; cascades; information;
    All these keywords.

    JEL classification:

    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty

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