Informational Cascades and Social Conventions
The New Palgrave Dictionary of Economics and the Law, May 1998
This entry reviews how the theory of informational cascades (in which an individual’s action is independent of his private information signal) explains the conformity, idiosyncrasy, and fragility of social behavior. It considers the effects on social outcomes of fashion leaders and of the public release of information. The entry further discusses the implications of informational cascades in various contexts, including fads, finance, medical practice, peer influence, politics, scientific theory, stigma, and zoology.