Are more Informed Agents able to shatter Information Cascades in the Lab ?



An information cascade occurs when agents ignore their own information completely and simply take the same action as predecessor agents have taken. This rational imitation has been empirically revealed by the Anderson and Holt experiment. We replicate this experiment, with different parameter values, and we test the possibility for more informed agents to shatter potential information cascades. Our results corroborate those observed by Anderson and Holt and the theoretical framework on which the experimental design is based.


Private Information Expected Profit Private Signal Information Cascade Previous Choice 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. [1]
    Anderson, L. and C. Holt, (1995), Information cascades in the laboratory.Google Scholar
  2. [2]
    Banerjee, A., (1992), A simple model of herd behaviour, Quarterly Journal of Economics, 107, 797–817.CrossRefGoogle Scholar
  3. [3]
    Bikhchandani, S., D. Hirshleifer and I. Welch, (1992), A theory of fads, fashion, customs and cultural change as information cascades, Journal of Political Economy, 100, 992–1026.CrossRefGoogle Scholar
  4. [4]
    Lee, I., (1993), On the convergence of information cascades, Journal of Economic Theory, 61, 395–411.CrossRefGoogle Scholar

Copyright information

© Springer-Verlag Berlin · Heidelberg 1998

Authors and Affiliations

  1. 1.Bureau d’Economie Théorique et AppliquéUniversité Louis PasteurFrance
  2. 2.Bureau d’Economie Théorique et AppliquéFrance

Personalised recommendations