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Electrophysiological Precursor of Information Cascade: Evidence from N200

Jianbiao Li, Xiaofei Niu (), Chengkang Zhu, Guangrong Wang, Qian Cao, Shuaiqi Li, Xiaoli Liu and Pengcheng Wang

EconStor Preprints from ZBW - Leibniz Information Centre for Economics

Abstract: When a sequence of decision makers with private information announce public predictions, initial conformity can create an information cascade in which all future decision makers will rationally match the early announcements and disregard private information. This study uses event-related potentials (ERPs) to compare the time course of neural activities associated with information cascade during sequential decision-making. In our experiment, a participant receives a private signal matched with public information in the congruent condition, while in the incongruent condition he or she receives a private signal against the public information. The results show that the conflict between private and public information triggers a more negative deflection peaking around 300 ms, with a right frontal scalp distribution similar to N200. Importantly, the N200 effect is negatively correlated with information cascade. These results add to the growing literature on neuronal mechanisms of information cascades by disentangling cognitive control related processes in inhibiting overweighting private information and the neural signal of a cascade in sequential decision-making.

Keywords: information cascade; N200; cognitive control; ERPs (search for similar items in EconPapers)
Date: 2018
New Economics Papers: this item is included in nep-neu
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