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  4. June 2004
  5. Distinguishing Informational Cascades from Herd Behavior in the Laboratory

American Economic Review

ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)

Distinguishing Informational Cascades from Herd Behavior in the Laboratory

  • Boğaçhan Çelen
  • Shachar Kariv
American Economic Review
vol. 94, no. 3, June 2004
(pp. 484–498)
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Abstract

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.

Citation

Çelen, Boğaçhan, and Shachar Kariv. 2004. "Distinguishing Informational Cascades from Herd Behavior in the Laboratory." American Economic Review, 94 (3): 484–498. DOI: 10.1257/0002828041464461

JEL Classification

  • D83 Search; Learning; Information and Knowledge; Communication; Belief