Herd behavior and investment

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Published in RePEc

Abstract

This paper examines some of the forces that can lead to herd behavior in investment. Under certain circumstances, managers simply mimic the investment decisions of other managers, ignoring substantive private information. Although this behavior is inefficient from a social standpoint, it can be rational from the perspective of managers who are concerned about their reputations in the labor market. The authors discuss applications of the model to corporate investment, the stock markets, and decision-making within firms. Copyright 1990 by American Economic Association. (This abstract was borrowed from another version of this item.)

Keywords

BEHAVIOR
DECISION MAKING
COPYRIGHT
INVESTMENT
MARKET
CIRCUMSTANCES
AMERICAN
HERD
ITEM
IGNORING

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Version 1, RePEc

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