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This research was supported in part by grants from the National Science Foundation (SES 9320617 and SES 9709530). I was to thank (without implicating) Charles Holt, Roger Sherman, Sarah Stafford, Steven Stern, Chris Swann, and two anonymous referees for helpful suggestions.
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Payoff Effects in Information Cascade Experiments
Article first published online: 26 MAR 2007
DOI: 10.1093/ei/39.4.609
Additional Information
How to Cite
Anderson, L. R. (2001), Payoff Effects in Information Cascade Experiments. Economic Inquiry, 39: 609–615. doi: 10.1093/ei/39.4.609
Publication History
- Issue published online: 26 MAR 2007
- Article first published online: 26 MAR 2007
- Abstract
- References
- Cited By
Error rates are estimated using data from “information cascade” experiments. The econometric estimation assumes a logistic error structure and error rates are compared across three experimental treatments that differ only with respect to payoff structure. In a “no payoff” treatment subjects receive a fixed payment for participating in the experiment and earnings do not vary with decisions. In “payoff” and “double payoff” treatments earnings depend on each subject's decisions. The results indicate that rewarding correct decisions reduces the amount of decision error. However, increasing the payment for a correct decision does not reduce errors over the range of payoffs considered.