Classroom Games: Information Cascades
AbstractThis paper describes how to set up a classroom exercise in which students see private signals and make public decisions in sequence. A pattern of conforming decisions in this context is called an information cascade. Once a cascade starts, it is rational for students to ignore their private signals and follow the pattern of previous decisions. This exercise provides an interactive framework that facilitates discussions of Bayes's rule, information, and social conformity.
CitationAnderson, Lisa R., and Charles A. Holt. 1996. "Classroom Games: Information Cascades." Journal of Economic Perspectives, 10 (4): 187-193. DOI: 10.1257/jep.10.4.187
- A20 Economic Education and Teaching of Economics: General