Information cascade

Information cascade is a phenomenon in social psychology in which the decisions of a few individuals have a disproportionally strong effect on the behavior of the group as a whole. Information cascade is commonly seen in groups under immediate stress from external forces, such as in herd behavior). The effect is to cause group decisions based on few signals and can often be against what the individual believes to be true.

Information cascade is currently the subject of investigation because of its apparent importance in economics, especially in financial markets. Dr. Charles Holt and his assistant Dr. Lisa R. Anderson are currently researching this phenomenon at the University of Virginia.