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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. doi:10.1006/game.2001.0881 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 | ||||
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Subjects: | B Philosophy. Psychology. Religion > BF Psychology H Social Sciences > HB Economic Theory |
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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 | ||||
Official Date: | 2002 | ||||
Dates: |
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Volume: | Vol.39 | ||||
Number: | No.1 | ||||
Page Range: | pp. 137-166 | ||||
DOI: | 10.1006/game.2001.0881 | ||||
Status: | Peer Reviewed | ||||
Publication Status: | Published | ||||
Access rights to Published version: | Restricted or Subscription Access | ||||
Date of first compliant deposit: | 22 December 2015 | ||||
Date of first compliant Open Access: | 22 December 2015 | ||||
Funder: | Economic and Social Research Council (Great Britain) (ESRC), AEA Technology (Firm) |
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