Information Cascades in the Laboratory
Anderson and Holt run a laboratory experiment on information cascades. Subjects see private signals drawn from an unobserved urn, announce predictions in sequence and are paid for correctly guessing which of two urns was used. When early decisions agree, it is rational for later decision makers to follow the pattern whatever their own signal says. Rational cascades formed in most periods in which such an imbalance occurred.
Anderson and Holt run a laboratory experiment on information cascades. Subjects see private signals drawn from an unobserved urn, announce predictions in sequence and are paid for correctly guessing which of two urns was used. When early decisions agree, it is rational for later decision makers to follow the pattern whatever their own signal says. Rational cascades formed in most periods in which such an imbalance occurred.
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Anderson, L. R., & Holt, C. A. (1997). Information Cascades in the Laboratory. American Economic Review, 87(5), 847-862