Two phenomena that have elicited particular interest are informational cascades and herd behavior, which can arise in a wide variety of economic circumstances. These phenomena have been deemed pathological because erroneous outcomes may occur despite individual rationality, and they may in fact be the norm in certain circumstances. While the terms informational cascade and herd behavior are used interchangeably in the literature, Smith and Sorensen (2000) emphasize that there is a significant difference between them. An informational cascade is said to occur when an infinite sequence of individuals ignore their private information when making a decision, whereas herd behavior occurs when an infinite sequence of individuals make an identical decision, not necessarily ignoring their private information. In other words, when acting in a herd, individuals choose the same action, but they may have acted differently from one another if the realization of their private signals had been different. In an informational cascade, an individual considers it optimal to follow the behavior of her predecessors without regard to her private signal since her belief is so strongly held that no signal can outweigh it. Thus, an informational cascade implies a herd but a herd is not necessarily the result of an informational cascade. The practical importance of the distinction between herds and cascades is that in a cascade social learning ceases since individual behavior becomes purely imitative and hence is uninformative. In a herd, in contrast, individuals become more and more likely to imitate but their actions still may provide information.