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Signal accuracy and informational cascades

Tuvana Pastine and Ivan Pastine

No 200620, Working Papers from School of Economics, University College Dublin

Abstract: We extend the Bikhchandani, Hirshleifer and Welch (1992) informational cascade framework to allow for asymmetric signal accuracy. Simulations demonstrate that even small departures from symmetry may lead to non-monotonic effects of signal accuracy on the likelihood of an inefficient cascade.

Keywords: Learning; Signal Precision; Herding; Information behavior--Mathematical models (search for similar items in EconPapers)
JEL-codes: D80 (search for similar items in EconPapers)
Date: 2006-11
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http://hdl.handle.net/10197/698 First version, 2006 (application/pdf)

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Working Paper: Signal Accuracy and Informational Cascades (2005) Downloads
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