Social learning, herd behaviour and information cascades: A review of the recent developments in relation to their criticisms

The social learning literature shows that when agents learn from the actions of others (in addition to their own private information) herd behaviour can arise. In some cases this may take the form of agents entering into an information cascade. Social learning has the potential to provide insights into many areas involving choice including how people choose their political leaders, join public rallies, purchase stocks or potentially make the decision to engage in criminal activities. In the application of social learning it has been asserted that the underlying assumptions are unrealistic and the characteristics associated with social learning are not robust to a relaxation of these assumptions. This paper reviews the growing literature on social learning in relation to these claims.