We study observational learning in environments with congestion costs: an agent's payoff from choosing an action decreases as more predecessors choose that action. Herds cannot occur if congestion on every action can get so large that an agent prefers a different action regardless of his beliefs...

Infrastructure networks are a key feature of an economy. Their functionality depends on the connectivity and sizes of different components and they face a variety of threats, from natural disasters to intelligent attacks. How should networks be defended and designed to ensure the best functionality?