On the convergence of informational cascades
Ho, Lee In (1993) On the convergence of informational cascades. Journal of Economic Theory, 61, (2), 395-411. (doi:10.1006/jeth.1993.1074).
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This paper investigates the problem of information aggregation in a sequential action model. In a model in which agents sequentially take actions after observing the action history and a private signal, an informational cascade is defined as an event in which the sequence of actions converges to a limit and a fully revealing informational cascade is defined as an event in which the sequence converges to a limit which is optimal under the true state. The necessary and sufficient condition for the occurrence of a fully revealing informational cascade almost everywhere is established. The necessary and sufficient condition is interpreted using the characterization in Milgrom [Econometrica47 (1979), 679–688] and McKelvey and Page (Econometrica54 (1986), 109–127]. Journal of Economic Literature Classification Numbers: C44. D81, D83.
|Subjects:||H Social Sciences > HB Economic Theory|
|Divisions:||University Structure - Pre August 2011 > School of Social Sciences > Economics
|Date Deposited:||12 Dec 2007|
|Last Modified:||27 Mar 2014 18:20|
|RDF:||RDF+N-Triples, RDF+N3, RDF+XML, Browse.|
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