Leeat Yariv: Caltech Division of Humanities and Social Sciences, UCLA Department of Economics

In this talk, I will briefly survey the existing literature on social learning and conformity (both theoretical and experimental) and then present evidence from an array of new experiments disentangling conformity, an intrinsic taste to follow others, from informational herding in a sequential choice setting. In these experiments, we use a design reminiscent of the standard social learning setup in which subjects choose the type of information they observe before making a decision. Namely, subjects choose between observing a private and informative signal or observing a social signal manifested in the history of play of predecessors who have not chosen a private signal. Even though the latter type is essentially a word of mouth signal, entailing no statistical information, a significant fraction of subjects choose it persistently. Allowing for payoff externalities by paying subjects according to a collective action chosen by a majority vote amplifies the results. So does an increase in the stakes. Our design allows us to rule out alternative explanations the literature proposes such as confusion and inequality aversion.