Working Paper BETA #2000-09

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Title : Tie-breaking Rules and Informational Cascades: A Note

Author(s) : Frédéric KOESSLER, Anthony ZIEGELMEYER

Abstract : In Bikhchandani, Hirshleifer, and Welch's (1992) specific model, it is showed that conformist behaviors can emerge due to information externalities. In this note we establish that this result, based on `informational cascades', heavily depends on the choice of a particular tie-breaking convention. Relaxing this assumption allows for other equilibria to exist, in which informational cascades are not necessarily observed. Our findings also have implications for the analysis of experimental data on informational cascades. In this respect, we argue that further experiments should be based on other experimental designs.

Key-words : Tie-breaking rules, informational cascades, experimental economics.

JEL Classification : C72, C92, D82