We prove that the recently proposed informational herding models are but special cases of a standard single person experimentation model with myopia. We then re-interpret the incorrect herding outcome as a familiar failure of complete learning in an optimal experimentation problem.

This paper systematically analyses and enriches the observational learning paradigm of Banerjee (1992) and Bikhchandani, Hirscleifer, and Welch (1992).

Given standard, transparent assumptions, this paper questions the Wall Street adage that 'timing is everything'. I show that for an Arrow security, a 'small' risk-neutral trader with private information that is conditionally independent of the public information is exactly indifferent about the...

We explore the constrainned efficient observational learning model - as when individuals care about successors, or are so induced by an informationally- constrained social planner. We find that when the herding externality is correctly internali zed in this fashion, incorrect herds still obtain.

This paper has pushed Becker's matching insights into a quite plausible search setting. Exploiting the implicit integral equation (10), we gave a thorough characterization of cross-sectional matching patterns in the equilibrium and constrained s ocial optimum of a frictional matching model. In...

This paper reexamines a classic insight of the assignment literature - when match- ing is assortative - in an environment with search frictions. We assume a continuum of heterogeneous agents who can produce only in pairs . If two agents form a match, they generate a ow of divisible output. We...