Herding And Social Pressure In Trading Tasks: A Behavioural Analysis

Michelle Baddeley, Demetris Pillas, Yorgos Christopoulos, Wolfram Schultz and Philippe Tobler

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

Abstract: We extend the experimental literature on Bayesian herding using evidence from a financial decision-making experiment. We identify significant propensities to herd increasing with the degree of herd-consensus. We test various herding models to capture the differential impacts of Bayesian-style thinking versus behavioural factors. We find statistically significant associations between herding and individual characteristics such as age and personality traits. Overall, our evidence is consistent with explanations of herding as the outcome of social and behavioural factors. Suggestions for further research are outlined and include verifying these findings and identifying the neurological correlates of propensities to herd.

Keywords: Herding; Bayesian updating; social learning; social pressure (search for similar items in EconPapers)
JEL-codes: D7 D8 D81 D82 D83 (search for similar items in EconPapers)
Pages: 29
Date: 2007-05
New Economics Papers: this item is included in nep-cbe, nep-exp and nep-neu
Note: Ec
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:cam:camdae:0730

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