Informational cascade is an economic theory of rational herding based on limited information by agents. Agents find it in their interest to copy behavior, because previous agents' actions convey useful information. Informational cascades often have idiosyncratic outcomes where everyone ends up doing the wrong thing — the ''blind following the blind''. This conformity is fragile, however, and thus can be overturned by relatively little new information. Informational cascades have been used as explanations for herding not only in the context of economics, but also in the context of finance, biology, sociology, engineering, political science, and other fields.
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Informational cascade
Informational cascade is an economic theory of rational herding based on limited information by agents. Agents find it in their interest to copy behavior, because previous agents' actions convey useful information. Informational cascades often have idiosyncratic outcomes where everyone ends up doing the wrong thing — the ''blind following the blind''. This conformity is fragile, however, and thus can be overturned by relatively little new information. Informational cascades have been used as explanations for herding not only in the context of economics, but also in the context of finance, biology, sociology, engineering, political science, and other fields.
See other meanings of words starting from letter:
I
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Informational_cascade
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