Induced Herding in Financial Markets
When investors receive the same information, why do entire markets still move together? This research studies induced herding, how signals, incentives, and uncertainty influence collective financial behavior, and explores whether AI can distinguish rational consensus from irrational imitation.
Research Question
When investors receive the same information, why do entire markets still move together, and can a model tell rational consensus apart from imitation?
Why This Matters
Herding is one of the few market phenomena that shows up across asset classes, time horizons, and investor sophistication levels. Understanding it is a prerequisite for designing better signals, better risk controls, and better decision support for asset allocators.
Current Direction
Mapping the conditions under which informational cascades form, and sketching evaluation criteria a model would need to satisfy before its output could be trusted as a herding indicator rather than noise.
Early Notes
Working through the classical informational cascade literature and translating it into testable propositions against intraday order flow data.