The phenomenon in which individuals believe others have superior information which they can take advantage of by copying their trades is referred to as ________.

Question

Quizplus · Accepted Answer

The cascade effect describes a situation where individuals in a group end up making similar decisions based on the assumption that the actions of others are based on better or superior information. This often leads to a "follow the herd" mentality, particularly in financial markets, where investors might copy the trades of others believing those individuals have access to superior information.

The Phenomenon in Which Individuals Believe Others Have Superior Information