Issue: Spring 1997
Pages: pp. 188-205
Authors: Jianbo Zhang
Title: Strategic Delay and the Onset of Investment Cascades
Abstract: I study the phenomenon of herd behavior in a framework where agents can endogenously choose both the actions and the timing of their actions. I assume that agents may have privately known quality and content of information. A unique symmetric equilibrium in pure strategies is proved to exist and characterized in its closed form. An investment cascade always occurs in the equilibrium, and a strategic delay is shown to exist before the sudden onset of the investment cascade. I also examine the loss of welfare from delay and information cascade
Search, Learning, and Information
(D830)
Theory of Uncertainty and Information (0261)