ECO200Y1 Lecture Notes - Lecture 22: Herd Behavior, Market Failure, Perfect Competition
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For the herd behavior, when a large part of the agents of a given market has insufficient access to the relevant information of that market. Which leads this part of agents to behave in the same way when facing a movement performed by a player supposedly better informed . Such behavior arising from the asymmetry of information between agents is very common in markets where there is a lot of speculation (stocks, derivatives, foreign exchange, etc. The mere existence of regulation and a regulatory entity is not enough for a market to have its failures arising from asymmetric information mitigated. A series of measures is needed that, interrelated and interdependent with each other, prevent the emergence of informational imbalances. And act in a timely manner on asymmetries that may occur. Among the measures mentioned above, the following stand out: adequate regulation of the markets; t. He development among agents of economic transactions guided by.
