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  5. Classroom Games: Information Cascades

Journal of Economic Perspectives

ISSN 0895-3309 (Print) | ISSN 1944-7965 (Online)

Classroom Games: Information Cascades

  • Lisa R. Anderson
  • Charles A. Holt
Journal of Economic Perspectives
vol. 10, no. 4, Fall 1996
(pp. 187–193)
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Abstract

This paper describes how to set up a classroom exercise in which students see private signals and make public decisions in sequence. A pattern of conforming decisions in this context is called an information cascade. Once a cascade starts, it is rational for students to ignore their private signals and follow the pattern of previous decisions. This exercise provides an interactive framework that facilitates discussions of Bayes's rule, information, and social conformity.

Citation

Anderson, Lisa R., and Charles A. Holt. 1996. "Classroom Games: Information Cascades." Journal of Economic Perspectives, 10 (4): 187–193. DOI: 10.1257/jep.10.4.187

JEL Classification

  • A20 Economic Education and Teaching of Economics: General
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