Social learning and costly information acquisition

Observational Learning and Demand for Search Goods

“…For example, an increase in product quality makes consumers more likely to purchase and search, but it is not difficult to construct examples in which the likelihood of paths ending in the cascade set for n is higher. Pastine and Pastine (2006) obtain similar "perverse" results when they study the effect of changing the accuracy of signals on the probability of incorrect herds, and Burguet and Vives (2000) find that increasing the noise in public information can improve welfare. By restricting the likelihood ratio to lie within the learning region, we are able to obtain a closed form solution for the probability of a bad herd.…”

“…They also show that in some cases, complete learning occurs even with bounded signals, a result similar to ours that comes from a very different model. Burguet and Vives (2000) relax the assumption that the precision of private signals is exogenous. They study observational learning where agents choose how much to invest in increasing that precision.…”

New product launch: herd seeking or herd preventing?

“…Another possible extension is to consider the optimal launch strategy when the acquisition of private information among adopters is costly (Burguet and Vives 2000).…”

Thought and Behavior Contagion in Capital Markets

“…Individuals have less incentive to investigate or observe private signals if the primary benefit of using such signals is the information that such use will confer upon later individuals. (Burguet and Vives (2000) examine the conditions under which complete learning occurs in a continuum model with investigation costs.) Indeed, if the basic information cascades setting is modified to require individuals to pay a cost to obtain their private signals, once a cascade is about to start an individual has no reason to investigate.…”