Information Cascades and Social Learning
Sushil Bikhchandani, David Hirshleifer, Omer Tamuz, Ivo Welch
Abstract
Social learning is the updating of beliefs based on observation of others. Such observation can lead to efficient aggregation of information, but also to inaccurate decisions, fragility of mass behaviors, and, in the case of information cascades, to complete blockage of learning. We review the theory of information cascades and social learning and discuss important themes, insights, and applications of this literature as it has developed over the last 30 years. We also highlight open questions and promising directions for further theoretical and empirical exploration. (JEL D71, D82, D83, D91, Z13)
Topics & Concepts
Social learningCognitive scienceInformation cascadeComputer sciencePsychologyCognitive psychologyKnowledge managementSocial psychologyOpinion Dynamics and Social InfluenceGame Theory and ApplicationsMedia Influence and Politics