The Informational Cascades of the US Housing Bubble

An informational cascade occurs when it's optimal for an individual, having observed the actions of those ahead of him, to follow them. Informational cascades are actually a subset of a broader phenomenon known as herding. Bob Schiller has explicitly argued that the US housing bubble can be thought of as an informational cascade. Morgan Kelly: Theory of Fads Fashioned Custom and Cultural Change as Informational Cascades is in this week's podcast.