What Causes Herding: Information Cascade or Search Cost?

Herding with Costly Information

We consider a standard sequential decision to adopt/buy a good in a herding environment. The setup is same as in Sgroi (2002). Contrary to the basic herding case we introduce a cost that the agents have to pay for the information about their predecessors’ actions. All agents receive informative signals as in the standard herding models but do not view the actions taken by their predecessors unl...

What causes acne inversa ( or hidradenitis suppurativa ) ?

Backbone Fragility Causes the Local Search Cost Peak

The local search algorithm Wsat is one of the most successful algorithms for solving the satis ability (SAT) problem. It is notably e ective at solving hard Random 3-SAT instances near the so-called `satis ability threshold', but still shows a peak in search cost near the threshold and large variations in cost over di erent instances. We make a number of signi cant contributions to the analysis...

Naïve Herding in Rich-Information Settings

Beginning with Abhijit V. Banerjee (1992) and Sushil Bikhchandani, David Hirshleifer, and Ivo Welch (1992), a theoretical literature has explored rational inference in social-learning settings. In the simplest model, a sequence of people each in turn choose one of two options, A or B, with each person observing all of her predecessors’ choices. They have common preferences over the two choices,...

Markets, Herding and Response to External Information

We focus on the influence of external sources of information upon financial markets. In particular, we develop a stochastic agent-based market model characterized by a certain herding behavior as well as allowing traders to be influenced by an external dynamic signal of information. This signal can be interpreted as a time-varying advertising, public perception or rumor, in favor or against one...