TY - GEN
T1 - The value of noise for informational cascades
AU - Le, Tho Ngoc
AU - Subramanian, Vijay G.
AU - Berry, Randall A.
N1 - Copyright:
Copyright 2014 Elsevier B.V., All rights reserved.
PY - 2014
Y1 - 2014
N2 - Informational cascades are said to occur when rational agents ignore their own private information and blindly follow the actions of other agents. Models for such cascades have been well studied for Bayesian agents, who observe perfectly the actions of other agents. In this paper, we investigate the impact of errors in these observations; the errors are modelled via a binary symmetric channel (BSC). Using a Markov chain model, we analyze the net payoff of each agent as a function of his signal quality and the crossover error probability in the channel. Our main result is that a lower error level does not always lead to a higher payoff when the number of agents is large.
AB - Informational cascades are said to occur when rational agents ignore their own private information and blindly follow the actions of other agents. Models for such cascades have been well studied for Bayesian agents, who observe perfectly the actions of other agents. In this paper, we investigate the impact of errors in these observations; the errors are modelled via a binary symmetric channel (BSC). Using a Markov chain model, we analyze the net payoff of each agent as a function of his signal quality and the crossover error probability in the channel. Our main result is that a lower error level does not always lead to a higher payoff when the number of agents is large.
UR - http://www.scopus.com/inward/record.url?scp=84906569582&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=84906569582&partnerID=8YFLogxK
U2 - 10.1109/ISIT.2014.6875003
DO - 10.1109/ISIT.2014.6875003
M3 - Conference contribution
AN - SCOPUS:84906569582
SN - 9781479951864
T3 - IEEE International Symposium on Information Theory - Proceedings
SP - 1101
EP - 1105
BT - 2014 IEEE International Symposium on Information Theory, ISIT 2014
PB - Institute of Electrical and Electronics Engineers Inc.
T2 - 2014 IEEE International Symposium on Information Theory, ISIT 2014
Y2 - 29 June 2014 through 4 July 2014
ER -