Information Cascades and Threshold Implementation: Theory and an Application to Crowdfunding

• 成果类型: Article
• 署名作者: Cong, Lin William; Xiao, Yizhou
• 署名单位: Cornell University; National Bureau of Economic Research; Chinese University of Hong Kong; Cornell University
• 刊物名称: JOURNAL OF FINANCE
• ISSN/ISSBN: 0022-1082
• DOI: 10.1111/jofi.13294
• 发表日期: 2024
• 页码: 579-629
• 关键词: behavior; uncertainty; wisdom; fads

摘要

Economic interactions often involve sequential actions, observational learning, and contingent project implementation. We incorporate all-or-nothing thresholds in a canonical model of information cascades. Early supporters effectively delegate their decisions to a gatekeeper, resulting in unidirectional cascades without herding on rejections. Project proposers can consequently charge higher prices. Proposal feasibility, project selection, and information aggregation all improve, even when agents can wait. Equilibrium outcomes depend on crowd size, and project implementation and information aggregation achieve efficiency in the large-crowd limit. Our key insights hold under thresholds in dollar amounts and alternative equilibrium selection, among other model extensions.