When Word of Mouth Leads to Consumer Herding: an Experimental Study

We design an experiment to study a new type of herd behavior that arises out of a model of localized communication in which all agents are identically informed a priori (i.e. there are no independently generated private signals). However, every agent can observe their immediate predecessor’s decision as well as payoff. Using a “queue” of four subjects as our unit of observation, we create theoretically predicted cascades under all experimental conditions. Both occurrences of cascades and strategic sophistication increase as the game proceeds, while inefficient cascades appear consistently throughout the experiment.


Vincent Mak and Rami Zwick (2011) ,"When Word of Mouth Leads to Consumer Herding: an Experimental Study", in AP - Asia-Pacific Advances in Consumer Research Volume 9, eds. Zhihong Yi, Jing Jian Xiao, and June Cotte and Linda Price, Duluth, MN : Association for Consumer Research, Pages: 132-133.


Vincent Mak, Judge Business School, University of Cambridge, UK
Rami Zwick, School of Businss, University of California, Riverside, USA


AP - Asia-Pacific Advances in Consumer Research Volume 9 | 2011

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