Distinguishing Informational Cascades from Herd Behavior in the Laboratory

Boğaçhan Çelen; Shachar Kariv

doi:10.1257/0002828041464461

Distinguishing Informational Cascades from Herd Behavior in the Laboratory

¹ Graduate School of Business, Uris Hall, Columbia University, 3022 Broadway, New York, NY 10027. · ² Department of Economics, Evans Hall #3880, University of California-Berkeley, Berkeley, CA 94720.

American Economic Review 2004

This paper reports an experimental test of how individuals learn from the behavior of others. By using techniques only available in the laboratory, we elicit subjects' beliefs. This allows us to distinguish informational cascades from herd behavior. By adding a setup with continuous signal and discrete action, we enrich the ball-andurn observational learning experiments paradigm of Lisa R. Anderson and Charles Holt (1997). We attempt to understand subjects' behavior by estimating a model that allows for the possibility of errors in earlier decisions.

DOI: 10.1257/0002828041464461
Volume: 94 (3)
Pages: 484-498
Language: en
Export: BibTeX
Sources: crossref openalex