Social learning in continuous time : when are informational cascades more likely to be inefficient?

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dc.contributor.author Pastine, Ivan
dc.contributor.author Pastine, Tuvana
dc.date.accessioned 2008-12-03T14:59:52Z
dc.date.available 2008-12-03T14:59:52Z
dc.date.copyright 2006 School Of Economics, University College Dublin en
dc.date.issued 2006-11
dc.identifier.other 200621 en
dc.identifier.uri http://hdl.handle.net/10197/699
dc.description.abstract In an observational learning environment rational agents may mimic the actions of the predecessors even when their own signal suggests the opposite. In case early movers’ signals happen to be incorrect society may settle on a common inefficient action, resulting in an inefficient informational cascade. This paper models observational learning in continuous time with endogenous timing of moves. This permits the analysis of comparative statics results. The effect of an increase in signal quality on the likelihood of an inefficient cascade is shown to be nonmonotonic. If agents do not have strong priors, an increase in signal quality may lead to a higher probability of inefficient herding. The analysis also suggests that markets with quick response to investment decisions, such as financial markets, may be more prone to inefficient collapses. en
dc.format.extent 306746 bytes
dc.format.mimetype application/pdf
dc.language.iso en en
dc.publisher University College Dublin. School Of Economics en
dc.relation.ispartofseries UCD Centre for Economic Research Working Paper Series en
dc.relation.ispartofseries WP06/21 en
dc.subject Comparative Statics en
dc.subject Herding en
dc.subject Herd Manipulation en
dc.subject.lcsh Social learning--Mathematical models en
dc.subject.lcsh Collective behavior--Mathematical models en
dc.title Social learning in continuous time : when are informational cascades more likely to be inefficient? en
dc.type Working Paper en
dc.internal.authorurl Ivan Pastine (web page) en
dc.internal.authorurl http://www.ucd.ie/research/people/economics/drivanpastine/home/ en
dc.internal.availability Full text available en
dc.internal.webversions http://www.ucd.ie/economics/research/papers/2006/WP06.21.pdf en
dc.status Not peer reviewed en
dc.neeo.contributor Pastine|Ivan|aut|UCD0020
dc.neeo.contributor Pastine|Tuvana|aut|


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