Information Cascades

When the behavioral anomaly called information cascade involves a particular stock, what is the _least likely_ outcome?

Correct! The stock could be underpriced as well if the information is negative and causes a rapid price decline, however, of the three statements, this is the least likely. The other statements are always correct, whereas the direction of the distancing from intrinsic value is not always an increase.

Incorrect. This often occurs as cascades will cause rapid increases or declines in the stock's price.

Incorrect. This will always occur.

The stock will become overpriced

The stock price will move further from its intrinsic value

The stock price will be driven by the opinions of those who influence others