Information aggregation with random ordering : cascades and overconficence

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URL:	http://ub-madoc.bib.uni-mannheim.de/2825
URN:	urn:nbn:de:bsz:180-madoc-28256
Document Type:	Working paper
Year of publication:	2000
The title of a journal, publication series:	None
Publication language:	English
Institution:	School of Law and Economics > Sonstige - Fakultät für Rechtswissenschaft und Volkswirtschaftslehre
MADOC publication series:	Sonderforschungsbereich 504 > Rationalitätskonzepte, Entscheidungsverhalten und ökonomische Modellierung (Laufzeit 1997 - 2008)
Subject:	330 Economics
Classification:	JEL: D8 C92 ,
Subject headings (SWD):	Informationsverhalten , Mikroökonomie , Verhalten , Entscheidung bei Unsicherheit
Keywords (English):	aggregation , Bayes' rule , cascades , experiment , overconfidence
Abstract:	In economic models, it is usually assumed that agents aggregate their private and all available public information correctly and completely. In this experiment, we identify subjects' updating procedures and analyze the consequences for the aggregation process. Decisions can be based on private information with known quality and observed decisions of other participants. In this setting with random ordering, information cascades are observable and agents' overconfidence has a positive effect on avoiding a non-revealing aggregation process but it reduces welfare in general.
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BASE: Nöth, Markus ; Weber, Martin

Google Scholar: Nöth, Markus ; Weber, Martin

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