Herding by attribution of privileged information

Abstract

We study a situation where agents take extreme actions and how these actions are imitated by others. First, Experiment 1 showed that an expert first mover had an advantage in obtaining herding by others on his investment decision, when compared to a non-expert first mover. Experiment 2 showed that this advantage only appeared when the first mover's investment was out-of-the-ordinary (in fact, highly aberrant). We obtained the same level of herding in Experiment 3 when the first mover had privileged information, instead of being an expert. Second, Experiment 4 showed that when people observed the same out-of-the-ordinary investment and did not know whether the first mover had privileged information or not, they herded on him as if he had privileged information. In fact, our data revealed that participants thought that the unknown first mover had privileged information. Furthermore, herding was statistically indistinguishable from the condition where observers knew unambiguously that the first mover had privileged information.

On the Role of Agent‐based Modeling in the Theory of Development Economics

“…Frey and Meier () use a field experiment on the willingness to contribute to charity and find that the willingness is increased when individuals are informed about high levels of contributions of their peers. Similarly Quiamzade and L'Huillier () find herding behavior in an investment decision experiment, where people tend to follow a bad decision of a first mover. In general we can say that the information set on which people base their decision can be a result of interactions with peers.…”

“…Many studies point to non-optimal decision making due to various behavioral issues. For instance, people might lack crucial pieces of information (Stiglitz, 2012, p. 37), misuse the available information (Betrand et al, 2010;DellaVigna, 2009) or even base their decision on beliefs rather than on verified information (Quiamzade and L'Huillier, 2009;DellaVigna, 2009). Besides issues related to information and its use, the cognitive ability and understanding of the decision to take might be limited (Kahneman and Thaler, 2006;Lusardi and Tufano, 2009;Brown and Graf, 2012;Gathergood, 2012).…”

Individual Characteristics of Students in the Course of Professional Development (as Exemplified by the Ulyanovsk Region of Russia)

“…Contemporary foreign authors also study general objective laws of formation of causal attribution and self-attribution. So A. Quiamzade (Quiamzade, 2009) from Geneva university, Switzerland and J. P. L'Huillier (Jean-Paul L'Huillier, 2009) from the University of Massachusetts, the USA, studied a situation when strawmen made unusual, beyond the legal framework, actions with capital investments and how these actions were copied by others (Quiamzade & L'Huillier, 2009). Their research, in particular, showed that, as a rule, testees attributed knowledge of special, confidential information to the unknown initiator and followed him as if this knowledge is true.…”

The Sound of Others: Surprising Evidence of Conformist Behavior

“…(2010); Quiamzade and LHuillier (2009); and Corazzini and Greiner (2007) report instead evidence of no conformity. 2 Studying conformist behavior in cheating Fosgaard, Hansen, and Piovesan (2013) show that subjects behavior is affected both by the awareness that cheating is an option and by knowing that other participants cheated.…”

“… See the experimental evidence of, among others, Anderson and Holt (); Hung and Plott (); Ziegelmeyer et al (); Quiamzade and L'Huillier (); and Corazzini and Greiner () report instead evidence of no conformity.…”