A Theory of Fads, Fashion, Custom, and Cultural Change as Informational Cascades
University of California, Los Angeles - Anderson School of Management
University of California, Los Angeles (UCLA); National Bureau of Economic Research (NBER)
David A. Hirshleifer
University of California, Irvine - Paul Merage School of Business
Journal of Political Economy, Vol. 100, No. 5, pp. 992-1026, October 1992
An informational cascade occurs when it is optimal for an individual, having observed the actions of those ahead of him, to follow the behavior of the preceding individual without regard to his own information. We argue that localized conformity of behavior and the fragility of mass behaviors can be explained by informational cascades.
Number of Pages in PDF File: 51Accepted Paper Series
Date posted: December 1, 2008 ; Last revised: May 18, 2009
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