6min chapter

The Joe Walker Podcast cover image

Markets And The Madness Of Crowds - Robert Shiller

The Joe Walker Podcast

CHAPTER

Informational Cascades Are the Best Way to Model Housing Markets

Bob Greene: I've read in several places that you think a better way to model housing markets is as informational cascades. The idea of an informational cascade is that people are sort of in a queue and they make a decision about whether, for example, to invest in the real estate market. And this hybrid cascade is mediated by the availability heuristic. He says it's important to include the reputational cascade because there does seem to be this really tense conformity during housing bubbles. This cycle has reinforced so much that the collective memory is or that the consensus is almost that this is the truth.

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