A simple note on Herd Behaviour

Andrea Morone and Eleni Samanidou ()
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Eleni Samanidou: University of Kiel

No 13, SERIES from Dipartimento di Economia e Finanza - Università degli Studi di Bari "Aldo Moro"

Abstract: In his "Simple model of herd behaviour", Banerjee (1992) shows that - in a sequential game - if the first two players have chosen the same action, player 3 and all subsequent players will ignore his/her own information and start a herd, an irreversible one. In this paper we analyse the role played by the tie-breaking assumptions in reaching the equilibrium. We showed that: players' strategies are parameter dependent; an incorrect herd could be reversed; a correct herd is irreversible.

Keywords: Herd behaviour; Run (search for similar items in EconPapers)
JEL-codes: D8 (search for similar items in EconPapers)
Pages: 665
Date: 2007-02, Revised 2007-02
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Journal Article: A simple note on herd behaviour (2008)
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