• Dr. Vikas Kumar Jaiswal
• Dr Shishir Pandey

This paper delves into the concept of informational cascades and its role in shaping herd behaviour in financial decision-making. In financial markets, investors' actions are often influenced by the actions of others, leading to a phenomenon known as herd behaviour. The study aims to provide a comprehensive understanding of the mechanisms behind informational cascades and their impact on market sentiment. The first section of the paper explores the theoretical framework of informational cascades, tracing its origins to social learning and information dissemination in decision-making processes. It reviews seminal works on the topic and identifies key factors that contribute to the formation of cascades, including the availability of public and private information, investors' risk tolerance, and the level of uncertainty in the market. Next, the paper investigates the empirical evidence supporting the existence of informational cascades in financial markets. It reviews various studies and research methodologies used to identify and measure herd behaviour, considering both large-scale market movements and individual investor actions. The analysis also examines the potential consequences of herding on market efficiency, stability, and the occurrence of speculative bubbles. Furthermore, the paper explores the psychological and behavioural factors that underpin herd behaviour. Understanding these factors can shed light on why individuals often follow the crowd rather than relying on their private information, leading to the propagation of informational cascades. The influence of media, social networks, and the availability of information plays a crucial role in shaping investor decisions and market sentiment. To conclude, the paper discusses potential strategies to mitigate the negative effects of herd behaviour on financial markets. It evaluates the role of regulatory measures, investor education, and improved access to reliable information in reducing the occurrence and impact of informational cascades. Additionally, it proposes future research directions that can provide deeper insights into the dynamics of herd behaviour and its implications for financial decision-making. Overall, this paper contributes to the growing body of literature on informational cascades and herd behaviour in financial markets, offering valuable insights for policymakers, investors, and researchers to better comprehend the complexities of market sentiment and decision-making processes.

Financial markets, Investor behavior, Social influences, Market efficiency, Speculative bubbles

"Informational Cascades and Market Sentiment: Unravelling Herd Behaviour in Financial Decision-Making", International Journal of Emerging Technologies and Innovative Research (www.jetir.org), ISSN:2349-5162, Vol.10, Issue 7, page no.g322-g330, July-2023, Available :http://www.jetir.org/papers/JETIR2307650.pdf

"Informational Cascades and Market Sentiment: Unravelling Herd Behaviour in Financial Decision-Making", International Journal of Emerging Technologies and Innovative Research (www.jetir.org | UGC and issn Approved), ISSN:2349-5162, Vol.10, Issue 7, page no. ppg322-g330, July-2023, Available at : http://www.jetir.org/papers/JETIR2307650.pdf