Self-Correcting Information Cascades Export

@article{citeulike:2418682, abstract = {We report experimental results from long sequences of decisions in environments that are theoretically prone to severe information cascades. Observed behaviour is much different-information cascades are ephemeral. We study the implications of a theoretical model based on quantal response equilibrium, in which the observed cascade formation/collapse/formation cycles arise as equilibrium phenomena. Consecutive cascades may reverse states, and usually such a reversal is self-correcting: the cascade switches to the correct state. These implications are supported by the data. We extend the model to allow for base rate neglect and find strong evidence for overweighting of private information. The estimated belief trajectories indicate fast and efficient learning dynamics.}, author = {Goeree, Jacob K. and Palfrey, Thomas R. and Rogers, Brian W. and Mckelvey, Richard D.}, citeulike-article-id = {2418682}, citeulike-linkout-0 = {http://www.blackwell-synergy.com/doi/abs/10.1111/j.1467-937X.2007.00438.x}, citeulike-linkout-1 = {http://dx.doi.org/10.1111/j.1467-937X.2007.00438.x}, doi = {10.1111/j.1467-937X.2007.00438.x}, journal = {Review of Economic Studies}, keywords = {cascades}, number = {3}, pages = {733--762}, posted-at = {2008-02-23 15:15:23}, priority = {2}, title = {Self-Correcting Information Cascades}, url = {http://dx.doi.org/10.1111/j.1467-937X.2007.00438.x}, volume = {74}, year = {2007} }

TY - JOUR ID - citeulike:2418682 L3 - citeulike-article-id:2418682 N2 - We report experimental results from long sequences of decisions in environments that are theoretically prone to severe information cascades. Observed behaviour is much different-information cascades are ephemeral. We study the implications of a theoretical model based on quantal response equilibrium, in which the observed cascade formation/collapse/formation cycles arise as equilibrium phenomena. Consecutive cascades may reverse states, and usually such a reversal is self-correcting: the cascade switches to the correct state. These implications are supported by the data. We extend the model to allow for base rate neglect and find strong evidence for overweighting of private information. The estimated belief trajectories indicate fast and efficient learning dynamics. IS - 3 JF - Review of Economic Studies EP - 762 TI - Self-Correcting Information Cascades VL - 74 SP - 733 KW - cascades AU - Goeree, Jacob AU - Palfrey, Thomas AU - Rogers, Brian AU - Mckelvey, Richard PY - 2007/// UR - http://dx.doi.org/10.1111/j.1467-937X.2007.00438.x ER -