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HERD BEHAVIOR IN BAYESIAN CHOICE AND LINEAR SEQUENCE OF INTERACTION
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HERD BEHAVIOR IN BAYESIAN CHOICE AND LINEAR SEQUENCE OF INTERACTION
Annotation
PII
S042473880000616-6-1
Publication type
Article
Status
Published
Authors
Mark Voronovitsky 
Edition
Volume 46 Issue 1
Pages
92-103
Abstract
The interesting effect of choice appears in the Becker's known example when the choice of consumers concentrates on one of two identical under all characteristics of the goods (restaurants). The case when the choice of participants occurs consistently one after another and each choice happens only once is investigated in the given paper. We assume that for all consumers there are the same aprioristic probability of preference of one of two goods (restaurants) and aprioristic probability of rationality of the consumer. It is assumed, that the participant knows about a choices of several his predecessors or about of choices of all of them and for a choice uses Bayesian strategy. The collective choice is investigated at the large length of sequence and various numbers of predecessors which choice each participant knows about. In the case when each consumer knows about choice of one his predecessor only the effect Becker's example(herd behavior) is absent, but a herd behavior can to arise in the case when he knows about choices of all his predecessors in sequence, but consumers take into account also the own information, received by them a priori.
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Date of publication
01.01.2010
Number of purchasers
2
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755
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 Voronovitskij M.M., Mejtal' Sh. (2003): Model' sotsial'nogo vliyaniya na tseny // Ehkonomika i mat. metody. T. 39. № 4.
 Anderson L.R., Holt Ch.A. (1997): Information Cascades in the Laboratory // American Econ. Rev. December.
 Banerjee A.V. (1992): A simple Model of Herd Behavior // The Quarterly Journal of Econ. Vol. CVII. August.
 Becker G.S. (1991): A Note on Restaurant Pricing and Other Example on Social Influence on Price // Journal of Polit. Econ. Vol. XCIX.
 Bikhandany S., Hirsheifer D., Welch I. (1992): A Theory of Fads, Fashion, Custom, and Cultural Change as Information Cascades' // Journal of Polit. Econ. Vol. 100. № 5.
 Scharfsein D.S., Stein J.C. (1990): Herd Behavior and Investment // American Econ. Rev. Vol. 80 (3).
 Smith L., Sorensen P. (2000): Pathological Outcomes of Observation Learning // Econometrica. Vol. 68 (2).

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