Herding With and Without Payoff Externalities - An Internet Experiment

Mathias Drehmann, Jörg Oechssler and Andreas Roider ()

No 5310, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Most real world situations that are susceptible to herding are also characterized by direct payoff externalities. Yet, the bulk of the theoretical and experimental literature on herding has focused on pure informational externalities. In this paper we experimentally investigate the effects of several different forms of payoff externalities (e.g., network effects, first-mover advantage, etc.) in a standard information-based herding model. Our results are based on an internet experiment with more than 6000 subjects, including a subsample of 267 consultants from an international consulting firm. We also replicate and review earlier cascade experiments. Finally, we study reputation effects (i.e., the influence of success models) in the context of herding.

Keywords: experiment; herding; information cascades; internet; network effects (search for similar items in EconPapers)
JEL-codes: C92 D8 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-exp and nep-net
Date: 2005-10
View list of references View citations in EconPapers

Downloads: (external link)
http://www.cepr.org/pubs/dps/DP5310.asp (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Working Paper: Herding with and without Payoff Externalities - An Internet Experiment (2004)
Working Paper: Herding with and without Payoff Externalities - An Internet Experiment (2005)
Journal Article: Herding with and without payoff externalities -- an internet experiment (2007)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:cpr:ceprdp:5310

Ordering information: This working paper can be ordered from
http://www.cepr.org/pubs/dps/DP5310.asp

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers
Address: Centre for Economic Policy Research, 53--56 Great Sutton Street, London EC1V 0DG
Series data maintained by ().