Interacting information cascades

on the movement of conventions between groups

James C.D. Fisher, John Wooders

    Research output: Contribution to journalArticle

    Abstract

    When a decision maker is a member of multiple social groups, her actions may cause information to “spill over” from one group to another. We study the nature of these spillovers in an observational learning game where two groups interact via a common player, and where conventions emerge when players follow the decisions of the members of their own groups rather than their own private information. We show that: (i) if a convention develops in one group but not the other group, then the convention spills over via the common player; (ii) when conventions disagree, then the common player’s decision breaks the convention in one group; and (iii) when no convention has developed, then the common player’s decision triggers the same convention in both groups. We also show that information spillovers may reduce welfare, and we investigate the surplus-maximizing timing of spillovers.

    Original languageEnglish (US)
    Pages (from-to)211-231
    Number of pages21
    JournalEconomic Theory
    Volume63
    Issue number1
    DOIs
    StatePublished - Jan 1 2017

    Fingerprint

    Information cascades
    Spillover
    Observational learning
    Social groups
    Information spillover
    Decision maker
    Surplus
    Private information
    Trigger

    Keywords

    • Cascades
    • Information spillovers
    • Observational learning
    • Social networks

    ASJC Scopus subject areas

    • Economics and Econometrics

    Cite this

    Interacting information cascades : on the movement of conventions between groups. / Fisher, James C.D.; Wooders, John.

    In: Economic Theory, Vol. 63, No. 1, 01.01.2017, p. 211-231.

    Research output: Contribution to journalArticle

    Fisher, James C.D. ; Wooders, John. / Interacting information cascades : on the movement of conventions between groups. In: Economic Theory. 2017 ; Vol. 63, No. 1. pp. 211-231.
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