• Corpus ID: 17438297

Herd Behavior and Investment

@inproceedings{GertnerHerdBA,
  title={Herd Behavior and Investment},
  author={Robert H. Gertner and Bengt Holmstrom}
}
This paper presents a theoretical model of herd behavior in investment. Managers mimic the investment decisions of other managers, in the process ignoring their private information about the attractiveness of various alternatives. Although this behavior is inefficient from a social standpoint, it is rational from the perspective of managers who are concerned about their reputations in the labor market. We discuss applications of the model to corporate investment, the stock market, and… 
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1,551 Citations
Highly Influential Citations
91
Background Citations
760
Methods Citations
51
Results Citations
47

1,551 Citations

Herd Behavior in Financial Markets

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Banks’ Incentives to Over-Herd: An Overview

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Can Herding Improve Investment Decisions

Existing models show that herding in decisions can cause signi cant information loss, inferior information aggregation and impaired decision making. However, we show that in a multi-stage decision…

Can Herding Improve Investment Decisions?

Existing models show that herding in decisions can cause signi cant information loss, inferior information aggregation and impaired decision making. However, we show that in a multi-stage decision…

Managerial Reputation and Corporate Investment Decisions

This review examines the incentives of managers to use investment choices as a tool for building their personal reputations or the reputation of their firms. These incentives come in three main…
...

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