Distinguishing Informational Cascades from Herd Behavior in the Laboratory
Coauthor(s): Shachar Kariv.
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-and-urn 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.
Source: American Economic Review
Celen, Bogachan, and Shachar Kariv. "Distinguishing Informational Cascades from Herd Behavior in the Laboratory." American Economic Review 94, no. 3 (June 2004): 484-98.