This proposal addresses the tendency of decision makers to incline their actions toward some group norm. Both rational and behavioral explanations will be evaluated. In the personal payoffs case, herding may be a rational result of gaining information from others in like circumstances, or as a means of protection from other imperfectly informed participants with whom the action must deal (e.g., a firm concerned about lending banks). Concerns about regret, magnified for outlier actions, may encourage herding. In the externalities case, herding may be an attempt to avoid the costs (self-perceived or externally imposed) of not meeting group norms (e.g., on curtailing emissions to prevent global warming.) Thus explicit agreements may substantially raise group norms, and may gain adherents even though the rational perscription is to free-ride. The proposed research will explore the roles of uncertainty and of the actor's perception of whether his decision is pivotal in securing agreement by others.
