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Wiley InterScience | |||
  The Economic JournalVolume 113 Issue 484, Pages 166 - 189 Published Online: 20 Dec 2002 Journal compilation © 2010 by the Royal Economic Society (Registered Charity No. 231508) Published on behalf of the Royal Economic Society
Abstract | References | Full Text: HTML, PDF (Size: 375K) | Related Articles | Citation Tracking  Information Aggregation with Random Ordering: Cascades and Overconfidence* Copyright 2003 Royal Economic Society ABSTRACTIn economic models, it is usually assumed that agents aggregate their private information with all available public information correctly and completely. In this experiment, we identify subjects' updating procedures and analyse the consequences for the aggregation process. Decisions can be based on private information with known quality and on the observed decisions of other participants. In this setting with random ordering, information cascades are observable and agents' overconfidence has a positive effect on avoiding a non-revealing aggregation process. However, overconfidence reduces welfare in general. Date of receipt of first submission: January 2000 Date of receipt of final typescript: February 2002 | 
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