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Information Cascade

情報カスケード効果 Behavioral Finance ✓ Verified Citations Academic Origin
<Definition> An information cascade is a phenomenon that occurs when it becomes "optimal (rational)" for an individual who has observed the actions of those who acted before them to completely disregard their own private information and simply follow the preceding individuals' actions.[1]
日本語
＜定義＞ 情報カスケードとは、先行する他者の行動を観察した個人が、自らの私的情報を完全に無視して先行者の行動に従うことが「最適（合理的）」となる状況において生じる現象である。[1]

<Mechanism>

Mechanism of the information cascade (overview)The causal chain from private information, through a predecessor's action, to an information cascade Private Information Predecessor's Action ① Receive a private signal ② See a predecessor's action ③ Weight it over one's own information ④ Disregard one's own information, follow predecessor (the result of a rational judgment) [Information Cascade]

① Receive a private signal
↓
② Infer that private information from the actions of those who acted earlier
↓
③ The information obtained from predecessors outweighs one's own information
↓
④ One's own action itself no longer conveys new information → cascade

Organized by the author based on the logic of the original paper

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