This is the final exam for Information Cascades & Herding. It pulls together the whole course: the urn experiment and the Bayesian moment a rational person should ignore their own signal, why a cascade aggregates almost no private information and so shatters and flips easily, its real faces — queues, bestsellers, bubbles, standing ovations, research and reputational herding — the ties to common knowledge and critical mass, and the designs that break a cascade by keeping independent signals alive. Take your time and reason each one through.
How this exam works
Read carefully — this exam is final. Each question appears one at a time. Once you submit an answer it is locked for good: there’s no going back, no retry, and no restart. Your score is hidden until the end, where you’ll see a pass/fail verdict. The pass mark is 70%. A few questions ask you to select all correct answers.
What precisely defines an information cascade?
Select an answer to continue.
Course Recap
Big picture
Information cascades & herding, in one picture
- Information Cascades
- The mechanism
- Others’ actions outweigh your one signal → you copy → information freezes
- Rational yet fragile
- Pools almost no info → shatters and flips on one new signal
- Real faces
- Queues, bestsellers, bubbles, ovations, citation & reputational herding
- The neighbours
- Common knowledge & critical mass; public signals start or break it
- The cure
- Keep signals independent: markets, contrarians, private/simultaneous choices
- The mechanism
Key takeaways
An information cascade forms when the visible actions of others outweigh your own single private signal, so copying them is the rational move — and the instant you copy against your own evidence, your action stops carrying information and the crowd stops learning. That makes a cascade rational for each person yet fragile and often wrong for the group: it rests on a handful of early signals, so a single credible public signal or one well-informed contrarian can shatter and reverse it. It wears many faces — queues, bestseller lists, bubbles, standing ovations, citation and reputational herding — and it must be told apart from mere conformity (social pressure) and from genuine consensus (independent evidence actually combined). Never read “everyone is doing it” as “it is true.” The cure is always the same: keep independent signals alive — aggregate votes and prices that reveal information rather than copyable actions, protect contrarians, and sequence or hide early choices so the crowd can pool what it actually knows.