On the absorbability of herd behaviour and informational cascades: an experimental analysis
A theory is said to be fully absorbable whenever its own acceptance by all of the individuals belonging to a certain population does not question its predictive validity. This accounts for strategic equilibria and can be related to the logic underlying convergence of behaviour and intentional herding in sequential games. This paper discusses the absorbability of informational cascades' theory by bounded rational decision-makers and analyses whether providing individuals with theoretic information on informational cascades affects overall probability of herding phenomena to occur as well as whether an incorrect cascade can be reversed because of bounded rational adapting of the theory's prescriptive.
|Date of creation:||2007|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: ++49 351 463 2196
Fax: ++49 351 463 7739
Web page: http://www.tu-dresden.de/wiwi/Email:
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Abhijit Banerjee & Drew Fudenberg, 2010.
"Word of Mouth Learning,"
Levine's Working Paper Archive
723, David K. Levine.
- Daniel Sgroi, 2000.
"The Right Choice at the Right Time: A Herding Experiment in Endogenous Time,"
Economics Series Working Papers
2000-W15, University of Oxford, Department of Economics.
- Daniel Sgroi, 2003. "The Right Choice at the Right Time: A Herding Experiment in Endogenous Time," Experimental Economics, Springer, vol. 6(2), pages 159-180, October.
- Sgroi, D., 2000. "The Right Choice at the Right Time: a Herding Experiment in Endogenous Time," Economics Papers 2000-w15, Economics Group, Nuffield College, University of Oxford.
- Andrea Morone, 2008.
"Financial markets in the laboratory: an experimental analysis of some stylized facts,"
Taylor & Francis Journals, vol. 8(5), pages 513-532.
- Andrea Morone, 2005. "Financial Market in the Laboratory, an Experimental Analysis of some Stylized Facts," Papers on Strategic Interaction 2005-27, Max Planck Institute of Economics, Strategic Interaction Group.
- Rabin, Matthew, 1997.
"Psychology and Economics,"
Department of Economics, Working Paper Series
qt8jd5z5j2, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
- Angela Hung & Jeff Dominitz, 2004. "Homogeneous Actions and Hetergeneous Beliefs: Experimental Evidence on the Formation of Information Cascades," Econometric Society 2004 North American Winter Meetings 64, Econometric Society.
- Gary S. Becker, 1991.
"A Note on Restaurant Pricing and Other Examples of Social Influences on Price,"
University of Chicago - George G. Stigler Center for Study of Economy and State
67, Chicago - Center for Study of Economy and State.
- Becker, Gary S, 1991. "A Note on Restaurant Pricing and Other Examples of Social Influences on Price," Journal of Political Economy, University of Chicago Press, vol. 99(5), pages 1109-16, October.
- Marco Cipriani & Antonio Guarino, 2005.
"Herd Behavior in a Laboratory Financial Market,"
American Economic Review,
American Economic Association, vol. 95(5), pages 1427-1443, December.
- Scharfstein, David S & Stein, Jeremy C, 1990.
"Herd Behavior and Investment,"
American Economic Review,
American Economic Association, vol. 80(3), pages 465-79, June.
- Andrea Morone & Serena Sandri & Tobias Uske, 2006.
"On the absorbability of the Guessing Game Theory - A Theoretical and Experimental Analysis,"
Papers on Strategic Interaction
2006-33, Max Planck Institute of Economics, Strategic Interaction Group.
- Andrea Morone & Serena Sandri & Tobias Uske, 2007. "On the absorbability of the Guessing Game Theory. A Theoretical and Experimental Analysis," series 0017, Dipartimento di Scienze Economiche e Metodi Matematici - Università di Bari, revised Apr 2007.
- Louise Allsopp & John Hey, 2000.
"Two Experiments to Test a Model of Herd Behaviour,"
Springer, vol. 3(2), pages 121-136, October.
- Allsopp, L. & Hey, J.D., 1998. "Two Experiments to Test a Model of Herd Behaviour," Discussion Papers 98-28, Department of Economics, University of Birmingham.
- John Hey & Louise Allsopp, . "Two Experiments to Test a Model of Herd Behaviour," Discussion Papers 99/24, Department of Economics, University of York.
- Anderson, Lisa R & Holt, Charles A, 1997. "Information Cascades in the Laboratory," American Economic Review, American Economic Association, vol. 87(5), pages 847-62, December.
- Anderson, Lisa R, 2001. "Payoff Effects in Information Cascade Experiments," Economic Inquiry, Western Economic Association International, vol. 39(4), pages 609-15, October.
- Sushil Bikhchandani & David Hirshleifer & Ivo Welch, 2010.
"A theory of Fads, Fashion, Custom and cultural change as informational Cascades,"
Levine's Working Paper Archive
1193, David K. Levine.
- Bikhchandani, Sushil & Hirshleifer, David & Welch, Ivo, 1992. "A Theory of Fads, Fashion, Custom, and Cultural Change in Informational Cascades," Journal of Political Economy, University of Chicago Press, vol. 100(5), pages 992-1026, October.
- Steffen Huck & Joerg Oechssler, 1999.
"Informational cascades in the laboratory: Do they occur for the right reasons?,"
- Huck, Steffen & Oechssler, Jorg, 2000. "Informational cascades in the laboratory: Do they occur for the right reasons?," Journal of Economic Psychology, Elsevier, vol. 21(6), pages 661-671, December.
- John D. Hey & Andrea Morone, 2004. "Do Markets Drive Out Lemmings-or Vice Versa?," Economica, London School of Economics and Political Science, vol. 71(284), pages 637-659, November.
- Morgenstern, Oskar, 1972. "Descriptive, Predictive and Normative Theory," Kyklos, Wiley Blackwell, vol. 25(4), pages 699-714.
- Markus Noth & Martin Weber, 2003. "Information Aggregation with Random Ordering: Cascades and Overconfidence," Economic Journal, Royal Economic Society, vol. 113(484), pages 166-189, January.
When requesting a correction, please mention this item's handle: RePEc:zbw:tuddps:1507. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ZBW - German National Library of Economics)
If references are entirely missing, you can add them using this form.