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Optimizing information in the herd : guinea pigs, profits, and welfare
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Sgroi, Daniel. (2002) Optimizing information in the herd : guinea pigs, profits, and welfare. Games and Economic Behavior, Vol.39 (No.1). pp. 137-166. ISSN 08998256
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Official URL: http://dx.doi.org/10.1006/game.2001.0881
Abstract
Herding arises when an agent's private information is swamped by public information in what M. O. Jackson and E. Kalai (1997, Games Econ. Behavior21, 102–134) call a recurring game. The agent will fail to reveal his own information and will follow the actions of his predecessor and, as a result, useful information is lost, which might have highlighted a better choice for later decision-makers. This paper evaluates the strategy of forcing a subset of agents to make their decision early from the perspective of a social planner, and a firm with a valuable or valueless product. Promotional activity by firms can be explained as an attempt to overcome the herd externality and maximize sales.
| Item Type: | Journal Article |
|---|---|
| Subjects: | B Philosophy. Psychology. Religion > BF Psychology H Social Sciences > HB Economic Theory |
| Divisions: | Faculty of Social Sciences > Economics |
| Library of Congress Subject Headings (LCSH): | Collective behavior -- Mathematical models, Information behavior -- Mathematical models |
| Journal or Publication Title: | Games and Economic Behavior |
| Publisher: | Elsevier Science BV |
| ISSN: | 08998256 |
| Date: | 2002 |
| Volume: | Vol.39 |
| Number: | No.1 |
| Page Range: | pp. 137-166 |
| Identification Number: | 10.1006/game.2001.0881 |
| Status: | Peer Reviewed |
| Publication Status: | Published |
| Access rights to Published version: | Restricted or Subscription Access |
| Funder: | Economic and Social Research Council (Great Britain) (ESRC), AEA Technology (Firm) |
| URI: | http://wrap.warwick.ac.uk/id/eprint/50142 |
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