Taking the road less traveled by: Does conversation eradicate pernicious cascades?

• 成果类型: Article
• 署名作者: Cao, H. Henry; Han, Bing; Hirshleifer, David
• 署名单位: University of California System; University of California Irvine; University of Texas System; University of Texas Austin; Peking University
• 刊物名称: JOURNAL OF ECONOMIC THEORY
• ISSN/ISSBN: 0022-0531
• DOI: 10.1016/j.jet.2011.03.010
• 发表日期: 2011
• 页码: 1418-1436
• 关键词: Information cascades; Network communications; Long-run efficiency

摘要

We offer a model in which sequences of individuals often converge upon poor decisions and are prone to fads, despite communication of the payoff outcomes from past choices. This reflects both direct and indirect action-based information externalities. In contrast with previous cascades literature, cascades here are spontaneously dislodged and in general have a probability less than one of lasting forever. Furthermore, the ability of individuals to communicate can reduce average decision accuracy and welfare. Published by Elsevier Inc.