ICT revolution, globalisation, and informational lock-in

Bulat Sanditov, MERIT, Maastricht University

We examine a model of social learning in networks following the lines of Bala and Goyal (1998, 2001). As a model of agents' behaviour we have chosen the model of informational cascades of Bikhchandani et al (1992). Similarly to Bala and Goyal we find that the higher is ‘degree of integration' within the society, the more likely is that conformity of actions will arise. However, unlike their results our model suggest that in the presence of informational externalities, globalisation of informational flows, expressed in the increasing density of communication channels in a network, may drive down the expected social welfare.

Date: 20 April-00 0000