Herding with Costly Observation∗ PRELIMINARY AND INCOMPLETE DRAFT COMMENTS WELCOME
نویسندگان
چکیده
We characterize optimal strategies in a simple herding model where observations have a small cost. We assume that there are two states and two possible signals that each agent may get. The prior distribution is biased towards adopting behavior. That is ex-ante adopting gives a higher expected utility than not adopting. Contrary to Kultti & Miettinen (2005) herding does not arise deterministically in this model when the cost of observation is small. ∗Miettinen gratefully acknowledges the financial support from Yrjö Jahnsson Foundation, Finnish Cultural Foundation and The Academy of Finland †[email protected] ‡[email protected] §Arkadiankatu 7, 00014 University of Helsinki, Finland.
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