Do We Follow Others when We Should? A Simple Test of Rational Expectations: Comment

Abstract

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Majority rules: how good are we at aggregating convergent opinions?

“…First, there is a substantial element of randomness in the participants' choices. Second, participants overweigh their private information, instead of following the informants, in the situation where the private signal they receive contradicts the choices of the previous participants (Goeree et al 2007;Weizsäcker 2010;Ziegelmeyer et al 2013). Egocentric discounting is not detrimental to participants when it breaks a negative cascade, but it is when it makes them depart from a positive one (which is to say, most of the time).…”

Informational Contagion in the Laboratory*

“…As a matter of fact, a statistical test reveals that this coe¢cient is not signiÖcantly di §erent from the coe¢cient on the value of asset A in market A (in either treatment). 41 This happens because the distribution of V B (equal to C in this treatment) is the same as that of 40 Subjectsí behavior in market A is similar to that of Treatment I. We report some descriptive statistics and regression results in Appendix E.…”

Information choice in a social learning experiment

“…Notice first that the private information compliance rate by the first players in each sequence, i.e., those at positions P1 and G1, happened to be the same. Furthermore, this average compliance rate of 91.8% across these two first positions is higher than the average compliance rate of 89.9% (χ 2 = 4.3921, p = 0.0361) by the first players across the 14 studies analyzed in meta-study by Ziegelmeyer et al (2013). 6 Thus, the average non-compliance rate of 8.2% by the first players provides empirical justification for the perfect equilibrium reported in Proposition 1.…”