The adaptive learning approach has been fruitfully employed to model the formation of aggregate expectations at the … macroeconomic level, as an alternative to rational expectations. This paper uses adaptive learning to understand, instead, the … sentiment, defined as the degrees of excess optimism and pessimism that cannot be justified by the near-rational learning model …

We designed four observational learning experiments to identify the key channels that, along with Bayes … observational learning accounts for the phenomenon of excessive herding, it captures well herd behavior with medium quality signals …