Learning from the Behavior of Others: Conformity, Fads, and Informational Cascades

Learning by observing the past decisions of others can help explain some otherwise puzzling phenomena about human behavior. For example, why do people tend to converge on similar behavior? Why is mass behavior prone to error and fads? The authors argue that the theory of observational learning, and...

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Bibliographic Details
Published in:The Journal of economic perspectives 1998-07, Vol.12 (3), p.151-170
Main Authors: Bikhchandani, Sushil, Hirshleifer, David, Welch, Ivo
Format: Article
Language:English
Subjects:
Behavior
Bestselling books
Conformity
Consumer behaviour
Consumer demand
Crime
Criminal justice
Economic behaviour
Economic externalities
Economic theory
Economics
Fads
Information economics
Learning
Observational learning
Payoffs
Signal noise
Social behaviour
U.S.A
Working papers
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Summary:Learning by observing the past decisions of others can help explain some otherwise puzzling phenomena about human behavior. For example, why do people tend to converge on similar behavior? Why is mass behavior prone to error and fads? The authors argue that the theory of observational learning, and particularly of informational cascades, has much to offer economics, business strategy, political science, and the study of criminal behavior.
ISSN:0895-3309
1944-7965
DOI:10.1257/jep.12.3.151