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Title:On the absorbability of herd behaviour and informational cascades: an experimental analysis PDF Logo
Authors:Morone, Andrea
Fiore, Annamaria
Sandri, Serena
Issue Date:2007
Series/Report no.:Dresden discussion paper in economics 15/07
Abstract: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.
Subjects:Theory absorption
Herd behaviour
Informational cascades
JEL:D8
C91
C72
Document Type:Working Paper
Appears in Collections:Dresden Discussion Paper Series in Economics, Faculty of Business and Economics, TU Dresden

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