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A Theory of Fads, Fashion, Custom, and Cultural Change as Informational Cascades

Journal of Political Economy, Vol. 100, No. 5, pp. 992-1026, October 1992

51 Pages Posted: 1 Dec 2008 Last revised: 18 May 2009

Sushil Bikhchandani

University of California, Los Angeles - Anderson School of Management

Ivo Welch

University of California, Los Angeles (UCLA); National Bureau of Economic Research (NBER)

David A. Hirshleifer

University of California, Irvine - Paul Merage School of Business; NBER

Date Written: March 1992

Abstract

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

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

Sushil Bikhchandani

University of California, Los Angeles - Anderson School of Management ( email )

110 Westwood Plaza
Los Angeles, CA 90095
United States
310-206-2686 (Phone)
310-825-1581 (Fax)

Ivo Welch

University of California, Los Angeles (UCLA) ( email )

110 Westwood Plaza
C519
Los Angeles, CA 90095-1481
United States
310-825-2508 (Phone)

HOME PAGE: http://www.ivo-welch.info

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

David A. Hirshleifer (Contact Author)

University of California, Irvine - Paul Merage School of Business ( email )

Irvine, CA California 92697-3125
United States

HOME PAGE: http://sites.uci.edu/dhirshle/

NBER ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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