Classroom Games: Information Cascades

Lisa Anderson and Charles Holt

Journal of Economic Perspectives, 1996, vol. 10, issue 4, 187-193

Abstract: This paper describes how to set up a classroom exercise in which students see private signals and make public decisions in sequence. A pattern of conforming decisions in this context is called an information cascade. Once a cascade starts, it is rational for students to ignore their private signals and follow the pattern of previous decisions. This exercise provides an interactive framework that facilitates discussions of Bayes's rule, information, and social conformity.

JEL-codes: A20 (search for similar items in EconPapers)
Date: 1996
Note: DOI: 10.1257/jep.10.4.187
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Citations: View citations in EconPapers (11)

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