Journal of Economic Literature
ISSN 0022-0515 (Print) | ISSN 2328-8175 (Online)
Information Cascades and Social Learning
Journal of Economic Literature
vol. 62,
no. 3, September 2024
(pp. 1040–93)
Abstract
Social learning is the updating of beliefs based on observation of others. Such observation can lead to efficient aggregation of information, but also to inaccurate decisions, fragility of mass behaviors, and, in the case of information cascades, to complete blockage of learning. We review the theory of information cascades and social learning and discuss important themes, insights, and applications of this literature as it has developed over the last 30 years. We also highlight open questions and promising directions for further theoretical and empirical exploration.Citation
Bikhchandani, Sushil, David Hirshleifer, Omer Tamuz, and Ivo Welch. 2024. "Information Cascades and Social Learning." Journal of Economic Literature, 62 (3): 1040–93. DOI: 10.1257/jel.20241472Additional Materials
JEL Classification
- D71 Social Choice; Clubs; Committees; Associations
- D82 Asymmetric and Private Information; Mechanism Design
- D83 Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
- D91 Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
- Z13 Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification