Herding with collective preferences
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- Ali, S.N. & Kartik, N. Econ Theory (2012) 51: 601. doi:10.1007/s00199-011-0609-7
This paper studies a simple model of observational learning where agents care not only about the information of others but also about their actions. We show that despite complex strategic considerations that arise from forward-looking incentives, herd behavior can arise in equilibrium. The model encompasses applications such as sequential elections, public good contributions, and leadership charitable giving.