On the convergence of informational cascades
On the convergence of informational cascades
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.
395-411
Ho, Lee In
8b58f91a-019c-4e50-98d0-fc12570b3b58
December 1993
Ho, Lee In
8b58f91a-019c-4e50-98d0-fc12570b3b58
Ho, Lee In
(1993)
On the convergence of informational cascades.
Journal of Economic Theory, 61 (2), .
(doi:10.1006/jeth.1993.1074).
Abstract
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.
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Published date: December 1993
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Local EPrints ID: 32988
URI: http://eprints.soton.ac.uk/id/eprint/32988
ISSN: 0022-0531
PURE UUID: 27f8a47e-08a8-4513-a213-4815d4061b07
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Date deposited: 12 Dec 2007
Last modified: 15 Mar 2024 07:40
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Author:
Lee In Ho
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