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MENTAL MODEL · M2237

Information Cascade

Information Cascade
BusinessHigh supportBehavioral Economics
Included
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Version 1.0.0 · Updated 2026-07-30

CORE DEFINITION

Refers to the phenomenon where people observe the actions of others (such as queuing for milk tea or selling stocks) and choose to ignore their own private information, blindly following the actions of others, causing such behavior to spread rapidly like a waterfall.

SCAFFOLDING EFFECT

psychology

Reduce cognitive load

Understanding herd behavior. It explains why many internet-famous stores or financial bubbles suddenly erupt. Cascades are fragile; once a small piece of contrary new information appears, the cascade may collapse instantly.

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Same mechanism as information waterfall: individuals make decisions sequentially, observing the actions of predecessors. When early actors emit signals that appear informative, subsequent actors abandon their own private information and imitate, causing behavior to spread like a waterfall. Cascades can be built on very thin evidence, and once a small amount of strong contrary signals appear, they may reverse instantly. Explains the sudden emergence and collapse of internet-famous stores and financial bubbles.

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Source support: Explicit

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    zh.wikipedia.orghttps://zh.wikipedia.org/wiki/%E4%BF%A1%E6%81%AF%E7%B4%9A%E8%81%AFZH · Explicit
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