Issue: Autumn 1997
Pages: pp. 407-425
Authors: Jay Pil Choi
Title: Herd Behavior, the 'Penguin Effect,' and the Suppression of Informational Diffusion: An Analysis of Informational Externalities and Payoff Interdependency
Abstract: This article analyzes a technology adoption process in which the effect of informational spillover interacts with network externalities. The interplay of informational externalities and payoff interdependency induces risk-averse and clustering behavior in the technology-adoption process. The analysis differs from the herd behavior literature in focusing on how the herd behavior of subsequent users influences the initial adoption decision. Moreover, herd behavior in this article stems from each agent's desire to inhibit the revelation of new information that can be used in a way detrimental to her, rather than from each agent's effort to free-ride on information contained in the decisions made by predecessors.
Search, Learning, and Information
(D830)
Technological Change: Choices and Consequences (includes impact
on production, welfare, income distribution, international
competitiveness, military power, measurement, and case studies;
international transfer of technology)
(O330)
Theory of Uncertainty and Information (0261)
Technological
Change and Innovation (6211)