Editing Information cascade (section)

== Responding ==

A literature exists that examines how individuals or firms might respond to the existence of informational cascades when they have products to sell but where buyers are unsure of the quality of those products. Curtis Taylor (1999)<ref>{{cite journal|last=Taylor|first=C.|title=Time-on-the-Market as a Sign of Quality.|journal=Review of Economic Studies|year=1999|volume=66|issue=3|pages=555–578|doi=10.1111/1467-937x.00098|doi-access=free}}</ref> shows that when selling a house the seller might wish to start with high prices, as failure to sell with low prices is indicative of low quality and might start a cascade on not buying, while failure to sell with high prices could be construed as meaning the house is just over-priced, and prices can then be reduced to get a sale. Daniel Sgroi (2002)<ref>{{cite journal|last=Sgroi|first=D.|year=2002|title=Optimizing Information in the Herd: Guinea Pigs, Profits, and Welfare|url=http://wrap.warwick.ac.uk/50142/1/WRAP_Sgroi_Paper9.pdf|journal=Games and Economic Behavior|volume=39|pages=137–166|doi=10.1006/game.2001.0881}}</ref> shows that firms might use "guinea pigs" who are given the opportunity to buy early to kick-start an informational cascade through their early and public purchasing decisions, and work by David Gill and Daniel Sgroi (2008)<ref>{{cite journal|last=Gill|first=D.|author2=D. Sgroi|title=Sequential Decisions with Tests.|journal=Games and Economic Behavior|year=2008|volume=63|issue=2|pages=663–678|doi=10.1016/j.geb.2006.07.004|citeseerx=10.1.1.322.7566|s2cid=5793119}}</ref> show that early public tests might have a similar effect (and in particular that passing a "tough test" which is biased against the seller can instigate a cascade all by itself). Bose ''et al.''<ref>{{cite journal|last=Bose|first=S.|author2=G. Orosel |author3=M. Ottaviani |author4=L. Vesterlund |title=Dynamic Monopoly Pricing and Herding.|journal=RAND Journal of Economics|year=2006|volume=37|issue=4|pages=910–928 |doi=10.1111/j.1756-2171.2006.tb00063.x|citeseerx=10.1.1.493.1834|s2cid=2984643}}</ref> have examined how prices set by a monopolist might evolve in the presence of potential cascade behavior where the monopolist and consumers are unsure of a products quality.