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INFORMATION CASCADES IN THE ADOPTION OF NEW TECHNOLOGY

By Walden and Browne
Abstract
This work presents a theory of information cascades, based on the work of Bikhchandi, Hirschleifer, and Welch
(1992), to explain fad-like behavior in the adoption of new technology. An information cascade occurs when
an individual ignores his or her own private signal about the value of a technology and relies, instead, upon
the observed actions of others. This can lead to serious problems if the observed actions in question are based
on still other observed actions rather than private signals. The present research provides an operational model
to assess information cascade theory and empirically tests the model in the context of the adoption of electronic
commerce technologies. The results suggest that information cascades play a large role in the adoption of such
technologies.
Created:Sun, 24 Oct 2004 11:35:04 GMT



Original: http://jondron.net/cofindfrshowresource.php?tid=5325&resid=544
Posted: October 24, 2004, 5:35 am