Do Individuals Recognize Cascade Behavior of Others? - An Experimental study

In a cascade experiment subjects are confronted with artificial predecessors prdecting in line with the BHW model (Bikhchandandi, Hirshleifer and Welch, 1992). Using the BDM mechanism we study subjects' probability assignments based on price limits for participating in the prediction game. We find increasing price limits the more coinciding predictions of predecessors are observed and regardless of wether additional information is actually revealed by predecessors' are observed and regardless of wether additional information is actually revealed by predecessors' predictions. Individual price patterns of more than two thirds of teh participants indicate that cascade behavior of predessessors is not recognized.