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

DC FieldValueLanguage
dc.contributor.authorPastine, Ivan-
dc.contributor.authorPastine, Tuvana-
dc.date.accessioned2008-12-03T14:59:52Z-
dc.date.available2008-12-03T14:59:52Z-
dc.date.copyright2006 School Of Economics, University College Dublinen
dc.date.issued2006-11-
dc.identifier.other200621en
dc.identifier.urihttp://hdl.handle.net/10197/699-
dc.description.abstractIn 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.extent306746 bytes-
dc.format.mimetypeapplication/pdf-
dc.language.isoenen
dc.publisherUniversity College Dublin. School Of Economicsen
dc.relation.ispartofseriesUCD Centre for Economic Research Working Paper Seriesen
dc.relation.ispartofseriesWP06/21en
dc.subjectComparative Staticsen
dc.subjectHerdingen
dc.subjectHerd Manipulationen
dc.subject.lcshSocial learning--Mathematical modelsen
dc.subject.lcshCollective behavior--Mathematical modelsen
dc.titleSocial learning in continuous time : when are informational cascades more likely to be inefficient?en
dc.typeWorking Paperen
dc.internal.authorurlIvan Pastine (web page)en
dc.internal.authorurlhttp://www.ucd.ie/research/people/economics/drivanpastine/home/en
dc.internal.availabilityFull text availableen
dc.internal.webversionshttp://www.ucd.ie/economics/research/papers/2006/WP06.21.pdf-
dc.statusNot peer revieweden
dc.neeo.contributorPastine|Ivan|aut|-
dc.neeo.contributorPastine|Tuvana|aut|-
item.grantfulltextopen-
item.fulltextWith Fulltext-
Appears in Collections:Economics Working Papers & Policy Papers
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