Helpful laymen in informational cascades

Jiemai Wu

Journal of Economic Behavior & Organization, 2015, vol. 116, issue C, 407-415

Abstract: This paper extends Bikhchandani, Hirshleifer and Welch's informational cascade model by introducing two types of players, experts with high signal accuracy and laymen with low signal accuracy. Assuming players randomize when indifferent, if a small enough group of laymen are present in the population, the probability of having a correct cascade is strictly higher than if no laymen are present. The same result is robust to almost every tie-breaking rule.

Keywords: Informational cascades; Bayesian learning; Heterogeneous signal accuracy (search for similar items in EconPapers)
JEL-codes: C72 D83 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:116:y:2015:i:c:p:407-415

DOI: 10.1016/j.jebo.2015.05.002

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