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Informational Cascades in Financial Economics: A Review

Maria Romano

Giornale degli Economisti, 2009, vol. 68, issue 1, 81-109

Abstract: The paper surveys and appraises the recent research on informational cascades and herding behaviour in capital markets. Standard models of informational cascades hardly apply to capital markets where all publicly available information is reflected in the price and investment decisions are continuous. The paper briefly describes the situations in which an informational cascade may take place also in the context of financial markets and offers a critical review of both empirical evidence and experimental results.

Keywords: informational cascades; transaction costs; financial markets (search for similar items in EconPapers)
JEL-codes: D82 D83 G10 (search for similar items in EconPapers)
Date: 2009
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