The Economics of Imitation*

Various reasons for imitation are considered, among them information-cost saving, calculation and decision-cost saving, strategic behavior, and externalities. Imitation can generate multiple equilibria, where self-interest and public interest diverge, imitation penalizes self-interest, but, when agents act differently, stringent conditions are required for saints, as well as villains and imitators, to survive. In organizations subject to free-riding and increasing returns, imitators increase optimum size and mean utility. The paper also studies the implications of imitative behavior in stock markets, and product markets with supply lags and ripoff/bargain seller heterogeneity. Throughout, at least a modicum of imitation is generally welfare-enhancing.