, Volume 51, Issue 3, pp 601-626
Date: 07 Apr 2011

Herding with collective preferences

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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.

This paper supersedes our working paper “Social Learning in Elections”.
We thank Daron Acemoglu, Susan Athey, Doug Bernheim, Vince Crawford, Eddie Dekel, Jeff Ely, Nir Jaimovich, Fahad Khalil, Jon Levin, Mark Machina, Marc Meredith, Roger Myerson, Marco Ottaviani, Joel Sobel, Lin Zhang, anonymous referees, and a number of seminar and conference audiences for helpful comments and discussions. Ali thanks the Institute for Humane Studies, the John M. Olin Foundation, and the National Science Foundation for support. Kartik thanks the National Science Foundation for support, and the Institute for Advanced Study at Princeton for hospitality and support. We appreciate proofreading by Uliana Loginova.