RUNNING WITH THE PACK: AN EMPIRICAL EXAMINATION OF INFORMATION CASCADES IN THE ADOPTION OF NOVEL TECHNOLOGIES

This work presents offers an empirical test of information cascades in the adoption of novel information technologies. An information cascade occurs when an individual discounts 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 cascade theory offers greater explanatory power than network externalities or temporal trends in the valuation of electronic commerce technologies