Two Experiments to Test a Model of Herd Behaviour

Hey, John D. and Allsopp, Louise (1999) Two Experiments to Test a Model of Herd Behaviour. [Discussion Paper]. p. 25. Discussion Papers in Economics (No. 1999/24).

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We carry out two experiments to test a model of herd behaviour based on the work of Banerjee (1992). He shows that herding occurs as a result of people observing the actions of others and using this information in their own decision rule. However, in our experiments herding does not occur as frequently as Banerjee predicts. Contrary to his results, the subjects' behaviour appears to depend on the probabilities of receiving a signal and of this signal being correct. Furthermore, he finds that the pattern of decision making over a number of rounds of the game is volatile whereas we find that decision making is volatile within rounds.

Item Type: Report / Paper (Discussion Paper)
Research documents and activity classification: Working Papers > Refereed Working Papers / of international relevance
Divisions: Department of Business and Management
Additional Information: The definitive version of this paper has been published in "Experimental Economics" , vol. 3(2), pages 121-136, October 2000.
MIUR Scientific Area: Area 13 - Economics and Statistics > SECS-P/01 Political Economy
Deposited by: Maria Teresa Nisticò
Date Deposited: 03 Dec 2010 16:43
Last Modified: 21 Apr 2015 23:13


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