Herding with Costly Observation
We characterize optimal strategies in a simple herding model where observations have a small cost. We assume that there are two states and two possible signals that each agent may get. The prior distribution is biased towards adopting behavior. That is, ex-ante, adopting gives a higher expected utility than not adopting. Contrary to Kultti & Miettinen (2005) herding does not arise deterministically in this model when the cost of observation is small.
Year of publication: |
2007
|
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Authors: | Kultti, Klaus K ; Miettinen, Paavo A |
Published in: |
The B.E. Journal of Theoretical Economics. - De Gruyter, ISSN 1935-1704, ZDB-ID 2268339-2. - Vol. 7.2007, 1
|
Publisher: |
De Gruyter |
Subject: | herding | information acquisition |
Saved in:
Online Resource
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