We develop a framework in which: (i) a firm can have a new product tested publicly before launch; and (ii) tests vary in toughness, holding expertise fixed.  Price flexibility boosts the strong positive impact on consumer beliefs of passing a tough test and mitigates the strong negative impact...

This paper presents a neural network model developed to simulate the endogenous emergence of bounded-rational behavior in normal-form games. There exists an algorithm which, if learnt by a neural network, would enable it to perfectly select Nash equilibria in never before seen games. However,...

This paper examines experimental evidence relating to herd behaviour in situations when subjects can learn from each other, and can delay their decision. Subjects acted rationally, gaining from observational learning, despite penalties for delay. Cascades were ubiquitous and reverse-cascades...

This paper considers the impact of reviewers on sales of products of quality unknown to consumers. Sales occur simultaneously after consideration by a reviewer with a known level of bias. Consumers observe the reviewer`s decision and a private signal. We find that: (a) with flexible prices and...

We consider a principal-agent problem where the principal wishes to be endorsed by a sequence of agents, but cannot truthfully reveal type. In the standard herding model, the agents learn from each other`s decisions, which can lead to cascades on a given decision when later agents` private...