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Herding Behaviour Inside the Board: an experimental approach

2006; Wiley; Volume: 14; Issue: 5 Linguagem: Inglês

10.1111/j.1467-8683.2006.00513.x

1467-8683

Maximiliano González, Renato Modernell, Elisa París,

Experimental Behavioral Economics Studies

An experimental study was conducted to measure the impact of “herding behaviour” inside a board of directors based on the González (2002 PhD dissertation) theoretical model, which maintains that in a board meeting composed of a CEO and two external directors (A and B), where voting is sequential (CEO → A → B) and the directors’ reputations are valuable, director B tends to copy director A’s decision. Based on the observations made through the experiment, we confirm the presence of herding behaviour.