Appendix to Herding, Social Preferences and (Non-) Conformity

2005

Abstract We study the role of social preferences in explaining herding behavior in anonymous risky environments. In an experiment similar to information cascade settings, but with no private information, we find no evidence that inequality aversion causes herding. On the contrary, we observe a significant amount of non-conform behavior, which cannot be attributed to errors. Keywords: herding, information cascades, non-conformity, inequality aversion, laboratory experiments JEL Classification: C92, D31, D81

Journal of Mathematical Sociology, 2012

Marengo and the second author have developed in the last years a geometric model of social choice when this takes place among bundles of interdependent elements, showing that by bundling and unbundling the same set of constituent elements an authority has the power of determining the social outcome. In this paper we will tie the model above to tournament theory, solving some of the mathematical problems arising in their work and opening new questions which are interesting not only from a mathematical and a social choice point of view, but also from an economic and a genetic one. In particular, we will introduce the notion of u-local optima and we will study it from both a theoretical and a numerical/probabilistic point of view; we will also describe an algorithm that computes the universal basin of attraction of a social outcome in O(M 3 log M ) time (where M is the number of social outcomes).

Queueing Systems, 2014

The system mentioned in the title belongs to the family of the so-called massively multi-player online social games. It features a scoring system for the elements of the game that is prone to herding effects. We analyze in detail its stationary regime in the thermodynamic limit, when the number of players tends to infinity. In particular, for some classes of input sequences and selection policies, we provide necessary and sufficient conditions for the existence of a complete meanfield-like measure, showing off an interesting condensation phenomenon.

1997

When privately informed individuals sequentially solve identical finite action choice problems seeing prior choices, herding eventually arises: everyone chooses the same action, ignoring future gains from more information revelation. This paper analyzes the team equilibrium that internalizes this gain using insights from Bayesian experimentation. This equilibrium can be implemented by selfish individuals with a simple rule, and it entails contrarian behaviour: (i) While informational herding is still constrained efficient, it requires more extreme beliefs. (ii) A new log-concavity assumption on signals both precludes cascades, and ensures that individuals should lean more against their myopic preference for actions that become more popular.

The Review of Economic Studies, 1991

Organizational Behavior and Human Decision Processes, 87(1), 180-206, 2002

We study a class of interactive decision-making situations in which each agent must choose to participate in one of several lotteries with commonly known prizes. In contrast to the widely studied paradigm of choice between gambles in individual decision making under risk in which the probabilities of the prizes are given, the probability of winning a prize in each of the lotteries in our study is known to decrease in the number of agents choosing this lottery. We construct the Nash equilibrium solution to this game and then test it experimentally in the special case where each lottery yields only a single prize. The results show a remarkable degree of tacit coordination that supports the equilibrium solution under the assumption of common risk aversion. However, this coordination is not achieved via individual-level randomization. Rather, the entry decisions of most of the subjects can be characterized by local adjustments to the outcome of the previous iteration of the same game along the lines suggested by anticipatory learning models. ᭧ 2001 Elsevier Science

Proceedings of the National Academy of Sciences, 2007

We report experimental results examining the properties of a bidding mechanism, the "Compensation Election," which is designed to implement a simple binary choice between two options. We may think of the group decision problem as a choice between a new rule and the status quo. The rule and the status quo are each common outcomes that apply across all individuals, but the value or cost that they induce on each individual differs according to each individual's circumstances: some gain, some lose, and others are unaffected by a change to the new from the old. Rather than casting votes, each subject submits a bid reflecting his willingness to pay to induce the group to select one option and the amount he wishes to be paid if the alternative option is selected. The Compensation Election chooses the option that receives the highest sum of bids. We find that, although the Compensation Election allows subjects to strategically bid above their value (or even for the option they do not prefer), such behavior is not the norm. We also find that subjects' bids more truthfully reveal their values when there are more bidders in the election.

Mathematical Social Sciences, 2009

To test the joint hypothesis that players in a noncooperative game (allowing mixtures over pure strategies) consult an independent preference relation and select a Nash equilibrium, it suffices to study the reaction of the revealed collective choice upon changes in the space of strategies available to the players. The joint hypothesis is supported if the revealed choices satisfy an extended version of Richter's congruence axiom together with a contraction-expansion axiom that models the noncooperative behavior. In addition, we provide sufficient and necessary conditions for a binary relation to have an independent ordering extension, and for individual choices over lotteries to be rationalizable by an independent preference relation.

International Game Theory Review, 2006

We consider a standard sequential decision to adopt/buy a good in a herding environment. The setup is same as in Sgroi (2002). Contrary to the basic herding case we introduce a cost that the agents have to pay for the information about their predecessors' actions. All agents receive informative signals as in the standard herding models but do not view the actions taken by their predecessors unless they pay the observation costs. In this set up the first and the second agents rely on their own signals when they make the decision to adopt/buy the good. Only the third agent is willing to buy the information on all of the preceding agents' actions. All agents following the third agent buy information on only one agent's action and decide to adopt/buy the good after updating their beliefs. What follows is that the two first agents' actions determine whether the rest of the agents will adopt/buy the good or not when information about the predecessors' actions is cheap ...

Games and Economic Behavior, 2008

We consider collective choice problems where a set of agents have to choose an alternative from a …nite set and agents may or may not become users of the chosen alternative. An allocation is a pair given by the chosen alternative and the set of its users. Agents have gregarious preferences over allocations: given an allocation, they prefer that the set of users becomes larger. We require that the …nal allocation be e¢ cient and stable (no agent can be forced to be a user We are grateful to two anonymous referees for their thoughtful comments and suggestions that greatly improved the paper. We have also received very useful comments from Pablo Amorós,