Forward and Falsely Induced Reverse Information Cascades

Journal of Behavioral Finance, Forthcoming

34 Pages Posted: 22 Jun 2011

See all articles by Michael Seiler

Michael Seiler

College of William and Mary - Finance

Date Written: June 20, 2011

Abstract

This study is the first to empirically test both forward and (falsely induced) reverse information cascades in an experimental setting using real-time instant feedback to participants. We find that, on average, individuals abandon their private information sets in favor of the group’s as early as three steps and as late as five steps into the information discovery process. Those scoring high on the Bearden, Netemeyer, and Teel (1989) Susceptibility to Normative Influence (SNI) scale are significantly more likely to experience the reverse cascade. Mavens and social connectors are hypothesized to be in the greatest position to increase the rapidity of such cascades in an actual market setting.

Keywords: Information Cascade, Forward Cascade, Falsely Induced Reverse Cascade, Mavens, Social Connectors

JEL Classification: R30, Z00

Suggested Citation

Seiler, Michael, Forward and Falsely Induced Reverse Information Cascades (June 20, 2011). Journal of Behavioral Finance, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1868596

Michael Seiler (Contact Author)

College of William and Mary - Finance ( email )

VA
United States

HOME PAGE: http://mason.wm.edu/faculty/directory/seiler_m.php

Register to save articles to
your library

Register

Paper statistics

Downloads
47
Abstract Views
409
PlumX Metrics