Research seminar by Erik Eyster (LSE): "Rational and Naive Herding"

Thursday, December 17 ICEF held the regular Research seminar.
Presenter: Erik Eyster (LSE)
Topic: "Rational and Naive Herding" (joint with Matthew Rabin) (pdf)

 Abstract: In social-learning environments, we investigate implications of theassumption that people naively believe that each previous person’s action reflectssolely that person’s private information, leading them to systematicallyimitate all predecessors even in the many circumstances where rational agentsdo not. Naive herders inadvertently over-weight early movers’ private signalsby neglecting that interim herders’ actions also embed these signals. Theyherd with positive probability on incorrect actions across a broad array of richinformationsettings where rational players never do, and because they becomefully confident even when wrong–can be harmed on average by observingothers.

Venue: Pokrovski Bulvar, 11, Room Zh-822 

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