Journal of Political Economy, Vol. 100, No. 5, pp. 992-1026, October 1992
51 Pages Posted: 1 Dec 2008 Last revised: 18 May 2009
Date Written: March 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.
Suggested Citation: Suggested Citation
Bikhchandani, Sushil and Welch, Ivo and Hirshleifer, David A., A Theory of Fads, Fashion, Custom, and Cultural Change as Informational Cascades (March 1992). Journal of Political Economy, Vol. 100, No. 5, pp. 992-1026, October 1992. Available at SSRN: https://ssrn.com/abstract=1286306
By Kai Konrad