Skip to main content



Information Cascades in Depth

http://object.cato.org/sites/cato.org/files/serials/files/regulation/2003/12/v26n4-2.pdf

I found this article interesting because it explores information cascades with other factors that were not discussed within the scope of this class. Lemieux discusses information cascades that start with an individual with high-precision signals, and reminds the reader of the fact that since individuals in information cascades participate in “imitative behavior,” much of the private information/signals of the individuals is lost, which I thought was an interesting perspective of looking at information cascades.

In class, we discussed examples of information cascades with students, where each student’s signal was deemed no less and no more precise than that of his peers. However, Lemieux brings higher-precision individuals into the picture. Individuals with higher-precision signals can cause a cascade immediately, as opposed to the student example we had in class, where it took 2 students guessing the same color marble to influence the third.¬†We also didn’t emphasize the loss of information caused by information cascades; large amounts of people abandon their own signals and private information, which may seem insignificant to the individual compared to the choices of all the people in front of him. However, in the big picture, lots of private information is being hidden/abandoned because of information cascades.

Comments

Leave a Reply

Blogging Calendar

November 2014
M T W T F S S
 12
3456789
10111213141516
17181920212223
24252627282930

Archives