On the Equivalence between Herding and Conditional Gradient Algorithms

We show that the herding procedure of Welling (2009) takes exactly the form of a standard convex optimization algorithm--namely a conditional gradient algorithm minimizing a quadratic moment discrepancy. This link enables us to invoke convergence results from convex optimization and to consider faster alternatives for the task of approximating integrals in a reproducing kernel Hilbert space. We study the behavior of the different variants through numerical simulations. The experiments indicate that while we can improve over herding on the task of approximating integrals, the original herding algorithm tends to approach more often the maximum entropy distribution, shedding more light on the learning bias behind herding

Eskimos, Reindeer, and Land

The following report is based on an interdisciplinary research study undertaken to investigate the social, economic, and cultural aspects of reindeer herding in northwestern Alaska. The primary purpose of the research project was to gather data on the past and present reindeer herding practices of the region, but also to seek information on herding and land uses, the future potential of this essentially Native industry, and its impacts on the people and economy of the area.National Park Service, U.S. Department of the Interior, and carried out by staff of the University of Alaska, Fairbanks

Herd Behavior in the Japanese Loan Market: Evidence from Bank Panel Data

This paper investigates whether Japanese banks had been following herd behavior in the domestic loan market from 1975 through 2002. Applying the technique developed by Lakonishok, Shleifer, and Vishny (LSV) (1992, J. of Fin. Econ.) to the data of loans outstanding to different types of borrowers, we obtain evidence indicative of the existence of herding. Consistent herding during the entire sample period is observed among regional banks, whereas city banks had been following a cyclical herd behavior with one peak around the bubble period in the late 1980s. Even after adjusting for herding resulting from rational or institutional factors, we still observe herding for regional banks in the entire period, whereas herding only in the bubble period remains for city banks. The results would indicate that regional banks had been consistently following irrational herd behavior, while city banks were frantic enough to herd only in the bubble period in the late 1980sherd behavior, LSV herding measure, adjusted herding measure, banks, loan market, Japan

When Herding and Contrarianism Foster Market Efficiency : A Financial Trading Experiment

While herding has long been suspected to play a role in financial market booms and busts, theoretical analyses have struggled to identify conclusive causes for the effect. Recent theoretical work shows that informational herding is possible in a market with efficient asset prices if information is bi-polar, and contrarianism is possible with single-polar information. We present an experimental test for the validity of this theory, contrasting with all existing experiments where rational herding was theoretically impossible and subsequently not observed. Overall we observe that subjects generally behave according to theoretical predictions, yet the fit is lower for types who have the theoretical potential to herd. While herding is often not observed when predicted by theory, herding (sometimes irrational) does occur. Irrational contrarianism in particular leads observed prices to substantially differ from the efficient benchmark. Alternative models of behavior, such as risk aversion, loss aversion or error correction, either perform quite poorly or add little to our understanding.Herding ; Informational Efficiency ; Experiments

Fluctuation analysis of the three agent groups herding model

We derive a system of stochastic differential equations simulating the dynamics of the three agent groups with herding interaction. Proposed approach can be valuable in the modeling of the complex socio-economic systems with similar composition of the agents. We demonstrate how the sophisticated statistical features of the absolute return in the financial markets can be reproduced by extending the herding interaction of the agents and introducing the third agent state. As well we consider possible extension of proposed herding model introducing additional exogenous noise. Such consistent microscopic and macroscopic model precisely reproduces empirical power law statistics of the return in the financial markets.Comment: 9 pages, 2 figure

When Herding and Contrarianism Foster Market Efficiency: A Financial Trading Experiment

While herding has long been suspected to play a role in financial market booms and busts, theoretical analyses have struggled to identify conclusive causes for the effect. Recent theoretical work shows that informational herding is possible in a market with efficient asset prices if information is bi-polar, and contrarianism is possible with single-polar information. We present an experimental test for the validity of this theory, contrasting with all existing experiments where rational herding was theoretically impossible and subsequently not observed. Overall we observe that subjects generally behave according to theoretical predictions, yet the fit is lower for types who have the theoretical potential to herd. While herding is often not observed when predicted by theory, herding (sometimes irrational) does occur. Irrational contrarianism in particular leads observed prices to substantially differ from the efficient benchmark. Alternative models of behavior, such as risk aversion, loss aversion or error correction, either perform quite poorly or add little to our understanding.Herding,Informational Efficiency, Experiments.

Herding with and without Payoff Externalities - An Internet Experiment

Most real world situations that are susceptible to herding are also characterized by direct payoff externalities. Yet, the bulk of the theoretical and experimental literature on herding has focused on pure informational externalities. In this paper we experi- mentally investigate the effects of several different forms of payoff externalities (e.g., network effects, first-mover advantage, etc.) in a standard information-based herding model. Our results are based on an internet experiment with more than 6000 subjects, including a subsample of 267 consultants from an international consulting firm. We also replicate and review earlier cascade experiments. Finally, we study reputation e¤ects (i.e., the influence of success models) in the context of herding.information cascades, herding, network e¤ects, experiment, internet.

Zealots in the mean-field noisy voter model

The influence of zealots on the noisy voter model is studied theoretically and numerically at the mean-field level. The noisy voter model is a modification of the voter model that includes a second mechanism for transitions between states: apart from the original herding processes, voters may change their states because of an intrinsic, noisy in origin source. By increasing the importance of the noise with respect to the herding, the system exhibits a finite-size phase transition from a quasi-consensus state, where most of the voters share the same opinion, to a one with coexistence. Upon introducing some zealots, or voters with fixed opinion, the latter scenario may change significantly. We unveil the new situations by carrying out a systematic numerical and analytical study of a fully connected network for voters, but allowing different voters to be directly influenced by different zealots. We show that this general system is equivalent to a system of voters without zealots, but with heterogeneous values of their parameters characterizing herding and noisy dynamics. We find excellent agreement between our analytical and numerical results. Noise and herding/zealotry acting together in the voter model yields not a trivial mixture of the scenarios with the two mechanisms acting alone: it represents a situation where the global-local (noise-herding) competitions is coupled to a symmetry breaking (zealots). In general, the zealotry enhances the effective noise of the system, which may destroy the original quasi--consensus state, and can introduce a bias towards the opinion of the majority of zealots, hence breaking the symmetry of the system and giving rise to new phases ...Comment: 13 pages, 15 figure