Can rationally ignorant voters and informed politicians lead to persistently inefficient policies in a democracy? A long tradition of thought in political science and economics has answered negatively, due to the averaging out of randomly uninformed voters or persuasion attempts in a competitive setting. Rather, explanations for the persistence of inefficient policies has focused on interest gr...

a r t i c l e i n f o The literature on short-selling restrictions focusses mainly on a ban's impact on market efficiency, liquidity and overpricing. Surprisingly, little is known about the effects of short-sale constraints on herd behaviour. Since institutional investors have come to dominate mature stock markets and rely extensively on short sales, constraining these traders may influence the...

We introduce a new measure for capital market efficiency. The measure takes into consideration the correlation structure of the returns (long-term memory), local herding behavior (information dimension) and uncertainty in the process (entropy). The efficiency measure is then taken as a distance from an ideal efficient market situation. Methodology is applied to a portfolio of 41 stock indices. ...

We conducted an interpretive, qualitative research study to investigate herding behavior around trending posts about disasters on Sina Weibo, one of the most popular social media websites in China. Our preliminary results show that in response to uncertain situations, users engage in sensemaking (Seidel, 2013) and become emotionally engaged (Taylor, 2015) as they converge around trending posts ...

This paper investigates how friendship relationships act as pipes, prisms, and herding signals in a large online, peer-topeer (P2P) lending site. By analyzing decisions of lenders, we find that friends of the borrower, especially close offline friends, act as financial pipes by lending money to the borrower. On the other hand, the prism effect of friends’ endorsements via bidding on a loan nega...

We introduce a new measure for the capital market efficiency. The measure takes into consideration the correlation structure of the returns (long-term and short-term memory) and local herding behavior (fractal dimension). The efficiency measure is taken as a distance from an ideal efficient market situation. Methodology is applied to a portfolio of 41 stock indices. We find that the Japanese NI...