Interacting Information Cascades

Download or read book Interacting Information Cascades written by James Fisher and published by . This book was released on 2017 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: When a decision maker is a member of multiple social groups, her actions may cause information to to spill over from one group to another. We study the nature of these spillovers in an observational learning game where two groups interact via a common player, and where conventions emerge when players follow the decisions of the members of their own groups rather than their own private information. We show that: (i) if a convention develops in one group but not the other group, then the convention spills over via the common player; (ii) when conventions disagree, then the common player's decision breaks the convention in one group; and (iii) when no convention has developed, then the common player's decision triggers the same convention in both groups. We also show that information spillovers may reduce welfare and we investigate the surplus-maximizing timing of spillovers.